Can you cover up defects in your house before sale?

As a seller of residential (or commercial) real estate be very careful as to what you attempt to conceal or fail to disclose. The Wisconsin Appellate Court recently held that misrepresentations are not limited to oral or written declarations but also could include efforts to conceal defects, such as painting a basement wall to conceal whether it leaked.

In the Novell v. Migliaccio (2009AP1576) decision, the Appellate Court stated:

The only issue on this appeal is whether painting a basement wall can be a misrepresentation under § 100.18(1) if a jury believes that the painting was done to hide evidence that the basement leaked. We hold that it can and that there are genuine issues of material fact whether the Migliaccios painted their basement and, if so, thus misrepresented the basement’s condition. Accordingly, we reverse and remand for trial.

Wisconsin Statute § 100.18(1) states in relevant part:

No person … with intent to sell … real estate … shall make … [a] statement or representation of any kind to the public relating to such … sale … of such real estate … or to the terms or conditions thereof, which … statement or representation contains any assertion, representation or statement of fact which is untrue, deceptive or misleading.

While the case was dismissed (presumably due to settlement) after remand to the Circuit Court, the Appellate Court’s holding that actions taken to conceal defects can constitute misrepresentations under Wisconsin Statute § 100.18 (which carries with it severe penalties such as attorneys’ fees and in some situations, double damages) still remains.

As a seller, be very careful as to what you try and conceal about the nature of your house and the disclosures that you make.