I bought a house that had a sinkhole claim in the past I wasn’t made.

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At Ashlar, I firmly b that an educated home buyer or seller is best equipped to make their own decisions. That’s why I take time out of my day each and every day to answer someone’s real estate question.  And, when I think the answer can be useful to you as well, I share it here.  So without further ado:


I bought a house that had a sinkhole claim in the past I wasn't made.

Real estate attorney should be your first stop this morning. Sinkholes and settlement (as in house movement) are mandatory disclosures for any seller or real estate professional that is aware of it.

Now, did your agent know about it? Probably not if it is not on the disclosure. We can only go off what is on the disclosure or what the listing agent tells us.

Did the seller or listing agent know? Listing agent, again, if seller doesn’t tell us or mention it it doesn’t show up in our normal course of business. Agents don’t usually have access to historic claims on the property.

Did the seller know? Well, that I’d argue has a decent chance. And just so you know, disclosure liability does not end at the closing table. If they knowingly did not disclosure the sinkhole, then they can be held liable. Sinkholes and problems insuring aren’t a new problem.

I’d also be irritated at the insurance company, home inspector, and maybe the title company. Insurance should have 100% looked at this before binding the policy prior to purchasing. Home inspector it might have showed up on their radar as settlement cracks, ramjacking, and similar. This sort of remediation will leave evidence and many times permits pulled. A great inspector will check those. Same with Title when performing municipal lien or open Permit searches.

Sadly this is another example of why you always want to hire the best, not the cheapest.

Not disclosing a sinkhole is honestly about as bad as it gets. It’s about as major as it gets, because it’s not 100% fixable from a home value standpoint due to the problems insuring. I have heard of previous non-disclosing sellers being liable for the FULL VALUE of the house in certain cases, because a sinkhole claim has a HUGE effect on property value. You will likely only be able to sell it for 50%-70% of market value now.

TALK TO A LAWYER ASAP. They will sort out who should be liable and what actions you should be taking, and there are insurance, protection funds, and seller liabilities you can likely be restored from.

Let me speak very plainly and a little bluntly here.

Someone has taken money likely in the amount of $50,000 – $150,000 from you here. You just haven’t realized it yet because you’re not trying to sell the property.

The question is, who?

Was that someone yourself for not reading the disclosure or listening to your agent? Probably not, because you likely wouldn’t be asking this question. Was it the seller, listing agent or buyers agent? Well, maybe, but they aren’t likely to volunteer as the liable party so you need someone working in your interest to help guide you through this.

A real estate attorney will help to answer those questions and prevent you from taking a misstep in an attempt to recover your very real loss here to make you as whole as possible.

You need to be speaking to a lawyer instead of the agent who could potentially be the party at fault here.

I almost 100% guarantee they and possibly their broker are in ‘This could potentially be pretty deep shit we’re in here’ mode and they could be taking steps to cover things up or framing things in a way to you hoping you will go away.

Thus talking to a lawyer is in YOUR best interest instead of the agent who is potentially a party in any future action your lawyer advises you on.

For example, if it’s on the disclosure and they didn’t bring it to your attention, then the seller completed their duty but the agent/brokerage failed to make you aware of the issue and implications well that’s probably not going to work out very well for your agent.

If it wasn’t on the disclosure then I can understand your agent not being aware of it. DESPITE THAT, their E&O insurance policy may still very likely cover it under their policy.

State only requires brokers to retain contract documents for 5 years I believe. However there’s things may still have and not tell you. They may still have it and tell you they don’t. It may still be attached in the MLS. It’s probably still in your email somewhere. And it may still be in the esignature package if you signed it that way.

But really, even if they don’t have the disclosure you like still have recourse.

Please consult with a real estate attorney today.

Kyle Sasser

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