Question: At the time that we purchased our home in Tempe we received the Seller’s Property Disclosure Statement (SPDS) from the seller stating “no” in response to the question “have there ever been termites?” After one month in our home the pest control company that we hired said that we had a bad termite problem. Our pest control company said that we should contact the Structural Pest Control Board (the state agency that regulates termite companies). The Structural Pest Control Board said that their records showed that, while the seller was the owner, our home had been treated for termites three different times in the past two years. Do we have any claim against the seller for our damages to correct the bad termite problem?
Answer: Probably. A seller has the obligation to disclose to a buyer any material and adverse fact about a home. Termite treatment three times in the past two years is a material and adverse fact. Therefore, you should have a fraud or fraudulent misrepresentation claim against the seller for your damages, including punitive damages, resulting from the seller’s intentional failure to disclose this “bad termite problem.”
Note: The failure to properly disclose a material defect in the SPDS is a breach of the purchase contract in Arizona, and can be a fraudulent misrepresentation. A plaintiff can recover against a defendant for a fraudulent misrepresentation if (i) a representation was made; (ii) that was false; (iii) that when made, the representation was known to be false or made recklessly without knowledge of its truth; (iv) that it was made with the intention that the plaintiff rely on it; (v) that the plaintiff did rely on it; and (vi) that the plaintiff suffered damages as a result.
The Arizona practice that a buyer receive the SPDS during the escrow period for the purchase a home strengthens a buyer’s claim for fraudulent misrepresentation. The receipt of the SPDS by the buyer eliminates three of the required elements: i) the representation was made, iv) with the intention that the plaintiff rely on it, and v) the plaintiff did rely on it.
Here, the remaining three elements can easily be satisfied: ii) the representation was false on the part of the seller because you have termites in the first month of occupancy, iii) the seller knew that there had been termites because the Structural Pest Control Board records show that the home was treated while the seller owned the home, and vi) you suffered damages as a result of the termite non-disclosure because you are now having to pay for a pest control company’s services to repair the termite damage.