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Disclosure Principle

In: Business and Management

Submitted By hnedelcu
Words 506
Pages 3
The most significant case in my life where the disclosure principle played a role was the purchase of our house. Soon after we bought our new property in a well-known suburb of Sofia, problems came to light. When we were buying the house, we knew that it was not in a perfect condition, but we were unaware of many of the problems that we faced later. Because we bought the house from acquaintances, we did not find it necessary to hire a private inspector to do full inspection prior to the purchase. We bought the house in good faith and believed that the good price for it was due to the fact that the previous owner wanted to sell it immediately before going into foreclosure. Once the house was bought, we had to live the consequences of a house with a leak in the plumbing, a leak in the roof and an addition to it build with no permit at all. As a result, we were shouldered with the financial burden of filing a lawsuit to resolve the matter. Unfortunately, the court decided that we were not entitled to collect any damages because the house was purchased without a home inspection and also because there wasn’t an indemnity clause into the sales contract which stated that if there was a problem, it is the seller, rather than us, who suffers financially. Had we had an inspection report, we would have collected damages. Not only did we spend a fortune on the lawsuit, but we were also fined because we were the legal owners of a house with unpermitted work. Moreover, a private inspector was sent by the city to inspect the extension to the house which was built without regulations approval. We looked into getting building regulations approval and planning permission for the house, but it was determined that the structure might present a safety hazard and we were required to completely tear it down which was very costly. Currently, more and more people in Bulgaria are failing to get permits in order to save money. I believe that this is an incredibly expensive mistake, which inevitably is going to lead to some tragic consequences sooner or later. I had to experience the consequences of an exclusion of full disclosure the hard way. We suffered a substantial financial loss just because the previous owners hid and did not disclose major defects of the house. They could have warned us of the situation and, perhaps more remarkably cover all expenses incurred for demolishing the addition to the house. I am convinced that the previous owners of the house did not act honorably and that their conduct was highly unethical. Their failure to fully disclose that the extension was illegally built had material consequences because it caused us to incur a huge loss on the house. The inclusion of this information would have definitely changed our decision to buy the house. Furthermore, it would have prevented us from the unhappy experience of going through a lawsuit.…...

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