How to Handle Undisclosed Foundation Damage and Previous Repairs

Gemma Johnstone
Written by Gemma Johnstone
Updated September 28, 2021
House in suburban area
Jupiterimages / Stockbyte via Getty Images

Time, thorough research, and documentation are your three greatest allies when finding undisclosed foundation problems

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Realizing that the seller didn’t disclose a foundation problem after closing on a home can be frustrating and upsetting. The key, though, is to act right away. Whether you’ve closed the sale or not, you may have more options than you think when you notice cracks in your foundation.

Here are eight steps to help you handle undisclosed foundation damage.

1. If You Haven’t Closed on the House Yet, Wait

Home repair issues get incredibly more complex once a sale is complete. In fact, as the buyer, you might have little to no leverage once the deal is closed. If it’s not, call your realtor ASAP to let them know about the issues you’ve found.

A foundation repair inspector can give you a proper diagnosis of what’s going on and what needs to be fixed (and how). Identifying the type of foundation repair that’s needed is the first key to getting the situation resolved.

2. Read Up on Your State’s Guidelines

Each state has different rules for real estate when the seller doesn’t disclose a foundation problem and separate definitions for what constitutes an “as-is” sale. For example, in some states, the realtor (not the seller) could be liable if undisclosed defects were not reported in the listing or before the inspection. Make sure you read up on your state’s guidelines surrounding these issues.

3. If You Own the Home Already, Check for Warranties

Taking action right after you notice foundation damage is key. The longer you wait to address the problem, the easier it is for a court to rule in the seller’s favor, citing the fact that the damage (or even a common foundation settlement) took place after they sold you the house.

Check your home warranties and manufacturer’s warranties to see if they cover foundation repairs. (Reading up on the different types of foundation systems, as well as basement and foundation terms, can make it easier to understand warranty legalese.) These steps could be your saving grace financially and may negate the need to contact the seller.

4. Look for Other Issues With Your Foundation

It can be disheartening to discover foundation damage, especially if the home inspector you hired didn’t notice it during their walkthrough. But since they did miss it, now’s a good time to look for additional signs of foundation trouble, as well as any other serious issues they didn’t disclose.

Those issues may include: 

  • Faulty electrical wiring

  • Roof problems

  • Plumbing issues

  • Environmental hazards

If any of these problems exist, they could help you mount a better case against the seller to receive compensation. Take pictures and videos and write down what you find. Having another inspector look at your home at this point could provide good evidence to prove your case.

5. Look for Evidence of a Cover-Up

Inspectors look at foundation
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It may sound cynical, but the best bargaining chip you have—assuming the sale is final, and your warranties won’t cover repairs—is to find proof that your seller knew the problem(s) existed and covered it (them) up.

Painting over cracked bricks or horizontal cracks in your basement wall to disguise them, for example, could be used as proof that the seller purposefully withheld information from you.

6. Communicate Amicably with the Seller

First, take a deep breath. Accusations, raised voices, or insulting language won’t get you far when contacting the seller (or their realtor). Instead, calmly outline the situation, letting them know by citing facts and providing video or image proof that you’ve found undisclosed foundation damage and would like to resolve the issue.

Your top priority when reaching out should be to prevent the seller (or their realtor) from getting into defensive mode. As the saying goes, you catch more flies with honey than vinegar.

Mentally prepare yourself for a compromise. If you can get the seller to pay for even a portion of the foundation repair costs, you can consider that a win—especially if, from a legal standpoint, they aren’t obligated to help at all.

7. Consider Out-of-Court Alternatives

If you can’t reach a resolution and want to pursue further action, you should speak to an attorney.

If the seller refuses to pay for the repairs, some out-of-court alternatives do exist. A lawyer can draft a demand letter outlining how much you’re asking for and what you plan to do if the terms aren’t met. Or you might consider mediation, which puts you both in front of a neutral third party to help resolve the issue without a judge’s ruling.

8. File a Lawsuit

If the undisclosed foundation damage is extensive, costly, or dangerous enough, it could make sense to file a lawsuit. Suing for breach of contract, failure to notify, negligence, and fraud are all possibilities in this situation.

Think long and hard before going down this route, though. Lawsuits are costly, to the point that you may spend more fighting your case than you would if you simply fixed the foundation issues. It might feel like the seller is getting away with something they shouldn’t be, but from a practical point of view, it could be the right thing to do.

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