Why is there no "lemon law" for homes?

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Brent Gray from Richardson, Texas, asks:

Why is there no lemon law for homes? We purchased a flipped home in 2021 and found many issues.

Daniel Whitney Sr. — the managing partner of Whitney, LLP in Maryland — has represented homebuyers with issues running the gamut, including structurally unsound foundations, leaky roofs and hidden mold in the walls.

"Just horror stories," Whitney said.

One couple he's representing purchased a new home advertised as being built in 2025. Turns out it was actually a rehabilitated farmhouse from 1912.

"Shortly after they moved in, they had to move out because the plumbing was not up to code, and the sewage smell throughout the whole house was so overwhelming that it was a health hazard," Whitney said.

If you buy a defective vehicle, customers are entitled to a repair, refund or replacement vehicle under lemon laws, which will vary by state. While there is no "lemon law" for homebuyers, various protections do still exist if a seller lied to you about any defects or purposefully omitted key information about your home, and you can take legal action against them.

Many states require disclosure statements, mandating sellers to list any defects or details like how old the roof is, whether the heating and air conditioning system works and whether there are any electrical problems, said Julie Patterson Forrester Rogers, a law professor at Southern Methodist University in Texas.

But that doesn't stop some sellers, like the ones Whitney has won against in court. If the housing market is especially competitive, some buyers have actually foregone inspections or inspection contingencies, which would normally allow them to back out on offers contingent upon any findings.

When it comes to the purchase of a new home from a builder, almost every state recognizes implied warranties, which protect homebuyers when it comes to defects in their house, Rogers said.

One defect might be having a home with a roof that is always going to leak, Rogers said.

"Because a builder is unlikely to agree to undoing the sale or paying damages, a lawsuit would usually be necessary. However, states often require by statute that the builder be given an opportunity to fix the problem first," Rogers said.

Implied warranties will vary state by state. In Texas, there are two warranties, one focused on habitability (you could sue, for example, if a defective sewer line makes your house uninhabitable) and one on workmanship, which is based on quality work, Rogers said.

"The real difference between liability for an ordinary seller versus a builder seller is that the builder makes the warranty, and that means even if they don't know there's a problem, you can go back against that builder on the warranty. Whereas if just an ordinary seller doesn't know about a problem, then they aren't going to have liability," Rogers said.

But there are still various protections for homebuyers who are buying from ordinary sellers.

If someone sells a house to you and claims it has a brand new roof when it's actually 20-years-old and leaks, that could be considered fraudulent misrepresentation and you would have a cause of action against the seller, Rogers said.

If there's termite damage to the house and instead of fixing the problem the seller puts up new drywall to cover it up, that could be considered fraudulent concealment, and you would also have a cause of action, Rogers said.

You can also be protected against negligent misrepresentation, in which a seller makes false statements without having exercised reasonable care.

There are various ways of assessing damages. Whitney said typically, the legal remedy is to sue for the cost to repair the house so that it aligns with how the home was represented. Sometimes, there might be a buyback.

In one case, there was a house flipper who sold his client a house with major structural flaws.

"We came up with an agreement where the flipper would buy it back for the sales price and pay all closing costs and attorney's fees, and hold my client harmless from any future claims that a subsequent buyer might have," he said.

In another case, back in September, Whitney said he had a seven-day trial against a listing agent who sold a property with unpermitted work and structural hazards. The jury awarded the plaintiffs $234,000 in damages.

You can even get compensation if the square footage in your house was calculated incorrectly by an appraiser, Whitney said.

As for what makes a case likely to win? Whitney said you need to have a clearly defined problem and clear evidence that either the seller or the agent knew about it or should have known about it.

Sometimes that means doing some digging around.

"For instance, I had a termite case in Baltimore City," Whitney said. "Seller denied having any knowledge of termites, and I found out that it was a rental property before it was sold to my client. Well, talking to the neighbors, turns out this was not a very nice person, and so they were very happy to talk to me about this, and I was able to get the names of the prior renters."

Whitney said it's "unconscionable" when buyers purchase their dream home, only to encounter an unsafe house with issues like termite damage or a failed septic system.

"When people buy a home, they're putting together all of their financial resources to make that downpayment and to budget so that they can pay the mortgage and their insurance and the utilities," Whitney said.

Homebuyers "can do all their due diligence in the world," only to find out that the seller was hiding things from them, Whitney said.

"But fortunately, there are legal remedies," he said.