There is a duty to disclose “non-discoverable” defects in an old condo unit.  If you’re planning to sell real estate with defects that you know about (such as recurring water damage), it is unlawful to fix the defects just for the purpose of sale and fail to disclose the recurring damage to the potential buyer.  Such actions may be construed as “active concealment,” and subject you to liability for misrepresentation and fraud.

It’s also unlawful to remain silent in the face of a known misunderstanding by the potential buyer, or to omit information that a reasonable person would consider important.  Special duties also are imposed upon agents toward their principals.  For instance, if a sales agent represents a buyer, the sales agent cannot conceal defects or fail to disclose defects in the hope of making a sale.  Such action would subject the sales agent to additional liability for breach of fiduciary duty, not to mention potential disciplinary action by the Real Estate Board.

The statute of limitations for fraud in D.C. is three years.  A buyer who finds himself or herself the owner of a defective property should ask neighbors whether the previous owner suffered the same type of damage.  If so, the buyer could investigate further and consider filing a lawsuit against the previous owner for the cost of the damage, as well as punitive damages. 

Was a home inspection conducted before the purchase? If the inspection revealed no major defects, it may be an indication of “concealing” repairs by the seller for the purpose of sale, or a negligent home inspection that failed to discover defects that a reasonably diligent inspection would have discovered.  The home inspection report will contain disclaimers and limitation of liability provisions. Review those provisions carefully, as you may have a cause of action against the home inspector as well.