House flipping is one way for real estate investors to turn their capital into income. By purchasing houses in mediocre condition, making improvements and relisting the home for sale again at a higher price, investors can potentially generate substantial profit. The more work investors do themselves, the lower the total repair and renovation costs for the project.
However, sometimes house flipping leads to liability and even litigation. Buyers may take issue with the quality of work performed or may discover undisclosed defects after they assume possession. Those who renovate and remodel homes to flip them could face liability for years after a closing.
The law extends strong buyer protections
Under current Arizona State statutes, builders, developers and others modifying residential properties can face defect-related lawsuits for years after the completion of work or the transfer of ownership. Plaintiffs alleging that house flippers performed substandard work could potentially take legal action up to n years after the date they acquired the property.
It is of the utmost importance for house flippers to ensure that any work they perform themselves conforms to all building code requirements and industry standards. They may also need to be fastidious when making disclosures about the condition of the property to prevent allegations that they intentionally misled buyers by withholding key information about harder-to-notice defects.
When done properly, repairing, renovating and reselling residential real estate can be a savvy investment strategy. Yet, those intending to flip homes and those facing controversy after transactions may want to consult with an Arizona real estate attorney to better understand their obligations and the potential liability they’re facing, as there is risk involved in this endeavor.
