$50,000 Settlement for Hidden Termite Damage

Whitney, LLP secured a $50,000 settlement for a client (“Buyer”) who purchased a home in Silver Spring, MD with undisclosed termite damage.  The Seller was aware of existing termite damage, but failed to disclose that important information.  Some home sellers fail to disclose problems with their home because the problems are expensive to fix.  Fortunately, Maryland homebuyers have many legal rights and can fight back against deception and nondisclosure of latent defects.  Termite damage is an especially prevalent problem in Maryland.

If you have a potential claim involving hidden termite damage or latent defects, contact Whitney, LLP for a consultation at 410 583 8000, or use our Quick Contact Form.

Read Whitney, LLP’s blog on some of our other termite damage cases here and read our blog on other types of cases we handle here.

Whitney, LLP has extensive experience representing homebuyers in a variety of real estate cases across Maryland, including but not limited to hidden termite damage and other latent defects.

Sellers Using the Disclosure Statement Must Disclose Defects, Including Termite Infestation and Damage

Prior to deciding to make an offer, Buyer was provided a copy of the Maryland Property Disclosure Statement (“Disclosure Statement”) prepared by Seller.

When a seller elects to provide prospective buyers with a Disclosure Statement, the buyer is furnished the Disclosure Statement “disclosing defects or other information about the condition of the real property actually known by the seller.” (emphasis added).

Maryland Residential Property Disclosure Statement

The Disclosure Statement contains the following notice to sellers, which states in pertinent part:

NOTICE TO SELLERS: Complete and sign this statement only if you elect to disclose defects including latent defects or other information about the condition of the property actually known by you; otherwise, sign the Residential Property Disclaimer Statement. (emphasis added).

Buyer was correspondingly informed:

NOTICE TO PURCHASERS: The information provided is the representation of the Sellers and is based upon the actual knowledge of Sellers as of the date noted. (emphasis added).

Seller’s False Disclosure Statement

The Seller’s Disclosure Statement noted her ownership of the Property since 2004. In response to specific questions set forth in the Disclosure Statement Seller represented as follows:

13. Wood destroying insects: Any infestation and or prior damage?

[   ] Yes  [X] No  [   ] Unknown

Any treatments or repairs?     [   ] Yes  [X] No  [   ] Unknown

Any warranties?          [   ] Yes  [X] No  [   ] Unknown

Comments: Termite company comes out 1 x/year, no termites.

*                      *                      *

Section 19 of the Maryland Property Disclosure as to Latent Defects, and the Seller’s Verification Section

The Seller also represented that the Property had no material defects in Section 19 of the Disclosure Statement.

19. Are there any other material defects, including latent defects, affecting the physical condition of the property?

[   ] Yes  [X] No  [   ] Unknown

Directly beneath these representations is the following verification:

The Seller(s) acknowledge having carefully examined this statement, including any comments, and verify that it is complete and accurate as of the date signed. The Seller(s) further acknowledge that they have been informed of their rights and obligations under § 10-702 of the Maryland Real Property Article. (emphasis added).

Buyer’s Reliance on the Property Disclosure Statement

The Disclosure Statement was signed by Seller.  Based on Seller’s representations, Buyer decided to make an offer. The offer to purchase the Property for $525,000 was accepted.

Of course, had the hidden termite damage been disclosed, the Buyer would either have refused to make an offer, or, required further inspection of the termite damage to determine the extent of the damage and cost to fix, and required a price reduction accordingly.

Discovery of Hidden Termite Damage

Following closing, Buyer moved into their new home. The next day hidden termite damage was discovered. Buyer hired Terminix to inspect the Property. Terminix found no active infestation but confirmed the presence of extensive termite damage.

Seller Misrepresented the History of Termite Infestation and Damage

Upon further investigation, Buyer learned that the Property has a long history of significant unrepaired damage that was known to Seller.  Beginning in 2004, in connection with Seller’s purchase of the Property, a pest control company performed a Wood Destroying Insect (“WDI”) Inspection and reported finding visible evidence of a termite infestation, which was treated, along with termite damage to the sill plate and termite damage in sub-basement involving joists and 2 x 4’s and termite damage to 2 x 4’s and baseboard in the basement, and noted termite shelter tubes throughout both locations. The WDI Inspection report further indicated multiple locations where “REPAIRS NEEDED.”

Following her purchase of the Property, Seller hired the pest control company to perform annual inspections. A review of service reports demonstrated continuing documentation of termite tubes and unrepaired termite damage, hidden termite damage, along with evidence of previous treatment over a 19-year period. These service reports were received by Seller, and they bear her signature attesting to receipt.

Seller Was Aware of Additional Possible Hidden Termite Damage

As set forth in the state-mandated MD-1 form that must be used for WDI Inspections for the purpose of real estate transactions, COMAR 15.05.01.14 B. (2), if the inspector finds evidence of the presence of termites, additional investigation is recommended to detect hidden damage. This recommendation is set forth as follows in the MD-1 report form:

NOTE: This is not a structural damage report. If box B above is checked, it should be understood that some degree of damage, including hidden damage, may be present. If any questions arise regarding damage indicated by this report, it is recommended that the buyer or any interested parties contact a qualified professional to determine the extent of damage and the need for repairs.

See MD-1 form. Licensed pest control companies uniformly recognize that if visible evidence of either an active or previous infestation or damage is noted by an inspector, it should be evaluated by a licensed contractor, because hidden damage is highly probable.

Based on the above referenced reports of the pest control company, Seller was aware of previous termite infestation, treatment of the infestation, extensive termite damage and, at best, partial repairs of the visible damage.

Seller’s Liability for Hidden Termite Damage

Buyer had a straightforward cause of action against Seller based on Negligent Misrepresentation and/or fraud. Despite representing that the information in the Disclaimer Statement was based on her actual knowledge, accurate and complete, Seller falsely denied: 1) prior termite treatment; 2) prior termite damage; 3) partial repairs; and 4) the existence of a warranty. Under Maryland law, violation of a statute such as § 10-702 of the Real Property Article (which requires a seller to provide a truthful Disclosure Statement), is evidence of negligence.

Damages To Repair Undisclosed Termite Damage

A cause of action based upon Negligent Misrepresentation or fraud allows for recovery of economic losses, including the cost of repairs. Buyer obtained a Termite Damage Repair Proposal in the amount of $50,120 prepared by a licensed contractor.

Daniel W. Whitney and Daniel W. Whitney, Jr. of Whitney, LLP

Hidden Termite Damage Lawyers – Whitney, LLP

The early resolution of this matter for $50,000 provided Client with compensation to pay for repairs without having to litigate the matter to a jury verdict.  Of course, past performance does not guarantee future results, and all cases are different.

Contact Whitney, LLP for a consultation at 410 583 8000, or use our Quick Contact Form.

We represent homeowners in termite damage claims and other real estate matters across Maryland, including Baltimore, Annapolis, Frederick, Bethesda, Rockville, Gaithersburg, Columbia, Towson, Bowie, and Salisbury.