How Long Are You Liable After Selling a House?

Selling a house can be a frustrating process in even the best circumstances. Both parties are fighting to get the best deal and your buyers might have specific requirements that need to be met for the sale to go through. Signing the closing documents can feel like a huge relief, especially because it means you are no longer financially tied to your former property. 

However, there may be times when you are still liable for the property, even after the buyer moves in and takes full ownership. Fortunately, you can move this liability by acting transparently and communicating clearly through your Realtor. 

Use this guide to learn more about post-sale liability and the common legal risks sellers face. Answer, “How long are you liable after selling a house?” and learn the responsibilities that sellers carry with them. 

What Are a Seller’s Legal Obligations After Selling a House?

Most sellers can walk away from their properties after all of the closing documents are signed and any profits from the sale are distributed. However, there are a few instances when a seller may be liable for the property. The most common reason why sellers are held liable is a failure to disclose known defects that could impact the buyer’s choice to bid on the house. 

When a seller lists a property, they are required to complete disclosure forms. These forms outline any known problems, ranging from a house fire they remediated to potential paranormal activity. A buyer who doesn’t want to deal with known issues might want to back out of the purchase instead or negotiate with the seller to either discount the house or fix the problem. 

When a seller knows about an issue but fails to disclose it on the form, they are intentionally misleading the buyer on the state of the property. The buyer might think they are purchasing a house in excellent condition but the reality is there are hidden issues. If the buyer discovers the issue – and that the seller had knowledge of it but hid the information – they could seek out financial compensation through legal recourse. The layman’s terms, the buyer could potentially sue the seller for lying to them.   

Disclosure forms protect both buyers and sellers. Buyers know the exact condition of the home they are purchasing while sellers have a place to prove they acted ethically. As long as the seller can prove they acted in good fair, they can minimize their liability post-sale.

Common Reasons for Post-Sale Liability

Every state has legal guidelines for what sellers need to disclose about a property’s condition, but there are a few common issues that are covered nationally. Here are a few reasons why a seller might face legal challenges after a sale that extend beyond property defects. 

• Undisclosed Issues. Sellers need to disclose any known structural defects, water damage, mold, and other major repairs the buyer would take on if they purchased the house. 
• Failure to Disclose Hazards. Buyers are protected from purchasing homes with lead-based paint, asbestos, or other environmental hazards. They need to know about these hazards and consent to their presence before moving forward with the sale. 
• Disputes Over Repairs. Buyers can bring liability claims against sellers when agreed-upon repairs in the sales contract weren’t completed properly or weren’t done at all. 
• Property Boundary Issues. Buyers can sue sellers if there are known boundary disputes that they have to deal with after the sale.
• Title Problems. Sellers must take steps to clear the title before selling it and avoid errors with the ownership documents.
• Liens and unpaid debt. Clearing liens is part of the title search process; however, some sellers might have unpaid HOA fees or contract disputes that they don’t disclose.
• Home Warranty Disputes. Buyers can also bring forward claims involving the coverage of repairs under a warranty offered by the seller.

Some states also protect buyers if the seller withheld information that might have affected the sale, even if it wasn’t directly related to the house. For example, if the open land next to a neighborhood is about to be developed into a mall, sellers might want to move and buyers might not want to invest in that area. The development could come as a shock to any unwarned buyers. 

How Long Are You Liable After Selling a House?

Now that you know what you are liable for, the next step is to answer how long you are at risk for future liability claims. Statute of limitations laws vary by state and by claim, which means you may remain legally responsible for the home longer than you expect. Here’s what you need to know when answering, “How long are you liable after selling a house?” 

• Disclosure Issues: Laws about disclosing property defects vary by state but can range from 2-10 years. Some laws might also vary depending on the severity of the issue.
• Warranty Claims: Coverage timeframes may depend on the home warranty terms, which usually last 1-2 years.
• Title Issues: Title insurance policies protect buyers but can result in claims against the seller in certain cases. The statutes of limitations for these claims also vary. 
• Environmental or Hazardous Materials: Specific timelines may apply depending on state regulations and the nature of the hazard. Knowledge of significant environmental hazards could come with longer liability timelines 

Unfortunately, there are no concrete answers to how long you will be held liable for known issues related to your property. If you are concerned about potential claims, work with an experienced real estate agent. They can walk you through the disclosure process and ensure you share everything you know about the property and follow various other legal obligations. 

How to Protect Yourself From Liability After Selling

While you can’t guarantee that the buyer won’t create legal complications related to the home sale, you can take steps to actively protect yourself, your family, and your financial assets. Here are five steps to decrease your chances of potential post-sale liabilities. 

• Be transparent with disclosures. Thoroughly complete your disclosure statement and explain any known issues honestly. Be as detailed as possible so buyers are aware of any problems. You should also review state-specific disclosure requirements to make sure you aren’t unintentionally leaving anything out. 
• Consider offering a home warranty. Home warranties can reassure buyers and reduce disputes. Your buyer can feel confident that any issues will be covered – at least partially. 
• Conduct pre-sale inspections. Consider getting a professional inspection before listing the home to identify and fix any potential issues. This way you can prove that you earnestly tried to learn about the state of the home before selling it. You can also encourage the buyer to get an inspection instead of waiving this contingency. 
• Keep documentation of any home repairs or improvements. Maintain records of disclosures, repairs, and other key communications related to the house. Hold on to any permits and certificates from the city to prove that the work was approved and inspected. 
• Work with experienced professionals. Always hire certified contractors, licensed real estate agents, and qualified attorneys to minimize risks related to your home. These professionals will act ethically and use industry knowledge to guide their actions. 

When sellers have a history of acting ethically and transparently, it’s harder for buyers to prove they were intentionally misled. These five steps can help you protect yourself after you sell your house.

Can Buyers Sue Sellers After Closing?

There are multiple instances when buyers can sue sellers after the closing appointment. These lawsuits usually follow the discovery of defects or omitted information – like undisclosed health or safety problems. Here are a few examples of when buyers might bring claims against sellers based on the sales contract. 

• The buyer discovered undisclosed major defects. Many liability claims fall into this category. The seller knew about the problems but the buyer did not discover them until after the closing date. 
• There was an intentional misrepresentation of the property. Along with hiding major defects, sellers might fail to disclose significant neighborhood issues or fail to mention that their renovations violate local zoning laws. These problems misrepresent the quality of the property or the future ease with which the buyer can pull permits on the house.
• There was a breach of contract regarding agreed-upon repairs or inclusions. Even if a seller follows real estate disclosure laws, they might face a lawsuit if they fail to make any agreed-upon repairs. Sellers are also liable if they take something they agreed to leave. 

The burden falls on the buyer to follow the statutes of limitations in their state and to prove that the seller acted negligently. They need to prove that the seller knew about the issue and did not disclose it – or did not make any agreed-upon repairs. 

Many states have “buyer beware” laws that place the burned of research on the person purchasing the home. For example, while disclosing major neighborhood issues is legally important, buyers should also carefully research the area to identify any problems before making an offer. It’s up to the buyer to inspect, research, and evaluate the house before agreeing to purchase it.

When Does Seller Liability End?

Another way to answer, “How long are you liable after selling a house,” is to look at specific deadlines that determine when your responsibility ends. Three legal timelines affect your liability. Here’s when you can finally walk away from a property. 

• The completion of the sale. The majority of homeowners are no longer responsible for the property’s condition once the closing documents are signed. As long as the seller disclosed all known issues and the buyer did their research, both parties should be happy transferring ownership of the home. 
• The statute of limitations has passed. The buyer can no longer bring claims against the seller once the legal timeframe for claims expires. Your Realtor should review the various statutes of limitations in your area.  
• The proper disclosures have been made or remediations have been done. If all issues were disclosed and agreed upon by the buyer, then the seller is no longer responsible for the home. If there is an issue, then the seller’s liability ends once they reach an agreement with the buyer to fix the problem. 

Sellers are typically protected from lawsuits if they acted in good faith and disclosed all known issues. The burden falls on the buyer to prove the seller knew about the issue and knowingly hid it. If the buyer discovers an issue after moving in and cannot prove the seller knew about it, they are responsible for making any necessary repairs. The buyer is also responsible for any new issues that arise.

Work With Your Real Estate Agent to Prevent Future Liability Claims

Just because a seller is no longer connected to a property doesn’t mean they are free from legal action. As long as the liability period is active, the buyer can bring claims against the former owner for failing to disclose issues. They might require the seller to settle outstanding HOA fees, pay unpaid property taxes, or cover the cost to fix issues they failed to disclose. Potential liability claims are a possibility for any seller who did not act in good faith when transferring the property.  

Fortunately, most sellers can avoid legal action by following disclosure laws and acting with transparency. Your real estate agent should walk you through the disclosure process. They should ensure every aspect of the property is discussed before the sale. This can mitigate your chances of any legal claims coming your way during the liability period. 

If you are ready to sell your house, start with FastExpert. Find a local real estate professional who understands state laws and can work to prevent future claims against you. Your Realtor cannot guarantee that you won’t face legal problems, but they can help you act ethically and in the best interest of all parties involved. Find a Realtor at FastExpert who you can trust.