Chasing Trouble: Selling a Home Mid-Lawsuit2020-04-23T00:25:22+00:00
09.30.2013 // CONSTRUCTION LAW WATCH
Chasing Trouble: Selling a Home Mid-Lawsuit

For a variety of reasons, such as a job change or change in financial circumstances, an owner may need to sell a home during a lawsuit. This can be a difficult proposition.

Full disclosure is required in any home sale. Like most states, Oregon requires that a seller disclose all known material defects. For example, sellers are required to complete a checklist disclosure form covering many individual components of the home, from title to underground tanks. Importantly, the standard form includes a catchall question: “Are there any other material defects affecting this property or its value that a prospective buyer should know about?”

When selling a home in the midst of a construction defect lawsuit, disclosure of construction defects is not only required, but often becomes the primary discussion point. Many owners believe when selling a home involved in construction litiation, they can simply assign the lawsuit recovery as part of the sale. Though a simple idea, this is actually quite complicated.

The original buyer of the home will likely have claims against a builder for breach of contract or implied warranties. After a sale, the new purchaser would likely have no contract rights against the builder, but rather would only have non-contract claims such as negligence. In addition, the sale itself may impact the strength of claims. Essentially, a buyer is agreeing to purchase the home with full knowledge of the defects, and may be negotiating a reduced price due to those defects. Liquidating the claim value during a sale creates a possible argument that the buyer has suffered only monetary losses rather than property damage or that the new purchaser should receive less than the full damages.

Sometimes owners want to assign claims to the new buyer, but assignments are risky, depending on the circumstances. Some contracts, for example, include language that prohibits assignment of the contract.

For these and other reasons, selling a home during the course of a construction defect lawsuit can be a challenging proposition. It can be done, but each person involved in that transaction should seek the assistance of counsel.

ABOUT BALL JANIK LLP

Ball Janik LLP was founded in 1982 with six lawyers and a four-person support staff in Portland, Oregon. Since our firm’s inception, we have expanded our capabilities, our professionals, and geographic footprint. What started as a firm focused in real property and land use (known then as Ball Janik & Novack), has grown to include the insights of a team of 30-plus attorneys, with a combined six centuries of experience, and capabilities including Real Estate and Land Use, Construction Defect, Commercial Litigation, Insurance Recovery, Construction and Design, Employment, Finance and Corporate, Public Agencies and Schools, and Community Associations. With offices in Florida and Oregon, our regional growth has earned us a national reputation for upholding the rights of our clients.

Ball Janik LLP has been recognized by Chambers USA, U.S. News & World Report and Best Lawyers®, The Best Lawyers in America©, and Corporate International. Ball Janik LLP’s success and integrity have repeatedly made it one of “Oregon’s Most Admired Professional Firms,” according to the Portland Business Journal’s survey results of CEOs throughout the region.

Heather J. Oden
Oregon , Portland
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