Hidden Defects

Q. After I bought a house, I discovered that the agent failed to disclose a number of defects which significantly affect the value. What recourse do I have?

A. According to Jewish law, the seller has a responsibility to disclose any significant defects in the sale item. Furthermore, the disclosure must be effective, not evasive. The Talmud relates:

One who sells a cow and states: This cow butts, she bites, she kicks, she's stubborn -- if the cow has only one of these defects and he made it inconspicuous among the others, the sale is void. (1)

The passage takes for granted that the seller has a responsibility to reveal any defects. However, in this case the defect is technically revealed, yet this is done in a deceitful way. The buyer sees that most of the defects mentioned are spurious, and thinks that the seller is only trying to reduce his responsibility. In the end, the actual known defect comes as a surprise, and the sale is void because there is a lack of informed consent or "meeting of the minds".

There is nothing inherently wrong for a seller to try to limit his liability or responsibility, as long as this is done in good faith. A seller can state: "To the best of my knowledge this item is in good condition, but I will not be liable if a previously unknown defect becomes evident." The biggest problem with the situation described in the Talmud is that the deception is in bad faith. The seller knows the defect exists at the time of the sale; in this case merely rattling off the "exemptions" is a deceptive tactic and is of no help.

What happens if the seller does not provide full disclosure? One consequence can be that described in the above passage: the sale is void. In Jewish law, every item is sold with an implied guarantee that it is free of material defects; in Maimonides' words, "Any ordinary purchaser intends to buy only an item free of defects." (2) If the item is defective, the presumption is the buyer never intended to acquire it and thus it may be returned for a full refund.

In some cases, the extent of the defect is not great enough to justify cancelling the sale. Here are a few examples:

1. A defect that is minor and can be easily repaired. If a person buys a house and discovers a broken window, that is not a reason to nullify the entire deal. In this case it is enough for the seller to fix the window or make a partial refund.
2. A defect that wouldn't have deterred the buyer in the first place. Very often a person is willing to overlook a few minor defects. Even so it is forbidden for the seller to hide these defects, because a seller gets good will for selling quality merchandise, even if he could get away selling merchandise of lower quality. Jewish law forbids the seller to benefit from undeserved goodwill. (3)

So according to Jewish law, the seller certainly owes you an apology for misleading you. If the defects can be repaired, the seller is obligated to either make the repairs or make a price adjustment reflecting the reduction in value they cause. If the defects are substantive and can't be repaired in a routine fashion, you would have the right to cancel the sale and get your money back.

SOURCES: (1) Babylonian Talmud Bava Metzia 80a. (2) Maimonides' Code, Laws of Sale 15:6 (3) Shulchan Arukh Choshen Mishpat 228