The Seller Didn't Disclose a Defect. Now What?

You bought the house, moved in, and now you are finding out something was wrong that the seller never mentioned. Maybe water is coming through a basement wall that was freshly painted before the sale. Maybe a contractor just told you the roof was years past replacement when you closed. Maybe something was marked "no" on the disclosure form that clearly should not have been.

New York still follows the doctrine of caveat emptor, "let the buyer beware," and that rule shapes what happens when a defect surfaces after closing.

New York Still Follows Caveat Emptor, With Important Exceptions

Under New York law, a seller has no general duty to volunteer information about a property's condition when the parties deal at arm's length. If the seller knew the furnace was failing and said nothing, that silence alone is not enough to create liability. The buyer had the opportunity to inspect, and the law puts significant responsibility on the buyer to use that opportunity.

Two exceptions matter most to a buyer who has discovered a serious defect after closing.

The most important exception is active concealment. New York courts have held that a seller can be liable when they did not merely stay silent but took affirmative steps to hide a defect from the buyer, specifically steps that interfered with the buyer's ability to discover the problem through a reasonable inspection. The standard, drawn from cases including Laxer v. Edelman, is whether the seller "thwarted" the buyer's efforts to inspect. Painting over water damage before the showing. Covering a structural crack with drywall. Blocking access to a crawl space. These are the types of acts courts have considered. Knowing about a defect and not mentioning it, without more, generally does not meet that threshold.

The second exception involves fraudulent misrepresentation: an affirmative false statement the buyer relied on to their detriment. If the seller told you directly that the basement had never flooded, or that the roof had been replaced two years ago, and neither was true, that is materially different from silence. A false statement in the Property Condition Disclosure Statement can also support a fraud claim, depending on the circumstances and how courts interpret the amended PCDA.

What the 2024 PCDA Amendments Changed and What They Did Not

New York's Property Condition Disclosure Act requires sellers of most residential properties to provide buyers with a completed disclosure statement before the contract is signed. Effective March 20, 2024, the law was amended to eliminate the option for sellers to pay a $500 credit at closing instead of completing the form. Sellers must now provide the statement.

What the amendment did not do is eliminate caveat emptor or create a straightforward path to recovery for every buyer who later discovers an undisclosed condition. The amended law created new obligations for sellers, but courts are still determining exactly how some of those provisions will be enforced. What is clear is that false or incomplete disclosure statements continue to be treated as evidence supporting a fraud or active concealment claim under common law, not as a standalone basis for recovery. The PCDA adds a layer of obligation, but the underlying legal standards that have governed these disputes for decades still apply.

In 2025, New York expanded the disclosure form to include flood-related questions. Sellers must now disclose information about flood zone status, prior flooding, and flood insurance history. Those additions increase the information buyers receive, but they do not change the underlying legal standards governing concealment and misrepresentation.

What a Buyer Can Actually Do After Closing

If you have found a defect after closing that you believe the seller knew about and concealed, the first question is whether you can establish active concealment or fraudulent misrepresentation, not just knowledge on the seller's part. That distinction often determines whether you have a viable claim at all.

If you can, the remedies available include actual damages covering the cost of repair, the diminution in the property's value caused by the defect, and other out-of-pocket losses that resulted from the seller's conduct. In cases involving intentional fraud, courts may also award punitive damages. Rescission, meaning unwinding the transaction entirely, is a theoretical remedy but an extraordinarily difficult one to obtain after a residential closing in New York, where title has transferred and both parties have proceeded with their lives.

The statute of limitations matters significantly here. A fraud claim in New York must generally be brought within six years of the fraud or two years from when the buyer discovered or should have discovered it, whichever is longer. A contract-based claim has a six-year limitations period from the date of breach. The clock starts running whether or not you are paying attention to it, which means buyers who discover a potential problem should not delay in getting legal advice.

These cases are fact-intensive and difficult to win. The seller's knowledge of the defect at the time of sale, the specific steps taken to conceal it, and whether the buyer had a genuine opportunity to discover it through inspection are all contested questions. Buyers who waived an inspection contingency or had an inspection that did not flag the problem face harder questions about whether the seller's conduct was actually the cause of their loss.

What Sellers Should Understand Before Listing

The elimination of the $500 opt-out credit means sellers can no longer avoid the disclosure form. Every seller of residential property in New York must now complete and deliver the statement before the contract is signed, unless the transaction falls within one of the statute's exempt categories, which include condos, co-ops, estate transfers, and certain other transfers where the seller lacks the requisite knowledge of the property's condition.

Completing the form honestly is also better legal protection than sellers sometimes assume. A seller who discloses a known defect fully and accurately is in a far stronger position after closing than one who omitted or minimized it. The form creates a record. When a buyer later claims the seller knew about a condition and concealed it, the completed disclosure statement is the first document that gets examined.

Sellers should also understand that an "as-is" clause in a purchase contract does not provide protection against a fraud claim. Courts have consistently held that selling a property as-is does not excuse a seller from liability for active concealment or intentional misrepresentation. The as-is language shifts inspection responsibility to the buyer, but it does not shield a seller who took steps to hide what they knew.

If Your Deal Involved a Defect That Was Not Disclosed

At Taub & Bogaty, PLLC, we represent buyers and sellers in residential real estate transactions across Long Island and the New York metro area. For sellers, we review the disclosure statement before it is delivered to make sure it accurately reflects what must be disclosed and what is appropriately qualified. For buyers, we review the disclosure statement received before contract signing and advise on what the form does and does not tell you about the property's condition.

If you are a buyer who has discovered a defect after closing that you believe was concealed, or a seller who has received a post-closing claim, call us at (516) 531-2500 or contact us at realestatelawny.com/contact. Delay can affect evidence, deadlines, and the practical options available to resolve the dispute.