Purchased foreclosure home ‘as is’ and now find out after we the home had cracks in wall that were covered up during renovation and problem with foundation.

UPDATED: Sep 30, 2022

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Purchased foreclosure home ‘as is’ and now find out after we the home had cracks in wall that were covered up during renovation and problem with foundation.

During inspection we noticed two cracks above living doorway and was told by inspector that it looked like the doorframe was not installed correctly and was easy fix. We questioned foundation but he looked under house and said he saw no problem.

Moved into home and had our contractor try to fix the two cracks but kept coming back, and more cracks started to appear.
Called realtor and had inspector come back out. He had an engineer do a more extensive look under the house and took a photo of a crack in one of the pillars that was not made aware to us before sell. Inspector is trying to tell us the house is settling but the house is 12 years old.

We paid an independent engineer to look at house and found out the cracks were pre-existing and were taped over and painted during pre-sale renovation. He also noted the crack under the house and stated we need three more pillars to level house.

Do we have any legal standing against the bank, realtor, and/or inspector to make repairs to our house. We would not have purchased home if we knew there was foundation problem.

Asked on April 1, 2016 under Real Estate Law, North Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

IF the cracks had not been taped and painted over to hide them, you would have no recourse--having bought the house "as is" with an opportunity to inspect, you would be held to have accepted the house literally "as was"--cracks, settling and all.
However, if you can show that the taping and painting was done (or at least ordered by) the bank after it took over the home, then they may have committed fraud: misrepresented (lied about or hidden) a material (important) fact to induce you to purchase the home, which misrepresentation it was reasonable (or understandable) to rely upon, if it took more than your own walk through or a typical home inspection (i.e. it took an engineer during an in-depth review) to find. You have to show that the bank, and not the prior owner, ordered the false "repairs" and did so to hide the condition, and that it was reasonable that you and the inspector did not find them pre-sale.
Similarly, if the bank had no idea what was going on, but the realtor took it on hersel to do this, then she may be liable for fraud. (The realtor is only liable for  her own acts, not the bank's.)
The inspector is most likely not liable: most inspection agreements limit their liability. Check your agreement, but it probably precludes liability in a case like this, for something deliberately concealed.

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