Can you take legal action against a previous owner of a home, after the Closing?

UPDATED: Oct 1, 2022

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Can you take legal action against a previous owner of a home, after the Closing?

I purchased a home two years ago. When we did inspection, we noticed leaking in the basement. The owner assured us she had never had this problem before and would fix it. She called a company to do dirt leveling to keep water away from the home. Presented us with a receipt and confirmed it was taken care of.
2 years later- there is still an issue and in an attempt to try and take care of it I called a local company that specializes in leaks in basements. New Link Destination
find out, this previous owner had called into the same company asking for a fix back during the sale of our home – but then canceled it. This was before the inspection date. So she knew there was a problem and from what it seams like, was not upfront with all the information to us.
This is an issue that will possibly cost 10,000s of dollars. Otherwise I would have no problem moving on and taking care of it myself.
Is there any options here or are we stuck?


Asked on June 28, 2018 under Real Estate Law, Iowa


S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

You can sue the seller (previous owner) for fraud.  Fraud is the intentional misrepresentation or nondisclosure of a material fact made with knowledge of its falsity and with the intent to induce your reliance upon which you justifiably relied to your detriment.
In other words, you would not have purchased the house had you known the true facts of the leak in the basement.
Your damages (monetary compensation you are seeking in your lawsuit for fraud) would be either the benefit of the bargain or your out of pocket loss.
Benefit of the bargain means that a defrauded purchaser may recover the difference between the real and represented value of the property regardless of the fact that the actual loss suffered might have been less.
Out of pocket determination of damages for fraudulent misrepresentation permits recovery of the difference between the price paid and actual value of the property acquired.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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