What Does a Seller of Property Have to Disclose to a Buyer?
We handle a lot of cases that involve non-disclosure by Sellers in connection with the sale of real estate. In those cases, the issue almost always comes up as to what the Seller of the real estate is required to disclose to the Buyer.
The simple answer is that the Seller is required to disclose any and all defects and other adverse conditions that materially affect the value and desirability of the property. This isn’t a particularly easy sentence to say, and it certainly is a difficult concept to understand. The best way to think of it is this: if you can ask the question whether a particular defect or adverse condition has to be disclosed, then it should be disclosed. If the defect or condition wasn’t at least arguably material to you, you wouldn’t ask. And if it is arguably material to you, then it may be material to the Buyer.
The more important question is not whether you should disclose the defect or adverse condition, but how to disclose it. For example, if the defect or adverse condition is easily repaired, perhaps you can repair it and disclose that the defect or condition existed, but it has been repaired. A good example is where the Seller knows of an area of the home that leaked. It may well be better to disclose the leak and that it has been repaired rather than to just disclose that a leak exists. And if the leak resulted in mold, the mold usually can be identified and remediated by qualified professionals at a reasonable cost, with a “clearance letter” issued to assure the Buyer that the mold is gone. The Seller should keep the backup documentation establishing the repair and remediation in case the Buyer asks for it.
In some cases, the Seller may not be able to repair the defect or other adverse condition prior to sale, or the repair might be cost-prohibitive for the Seller. In that situation, the way the disclosure is worded often will have an effect on the Buyer. Disclosures always must be accurate, but they can be worded in different ways.
The laws regarding disclosure have both an element of certainty – for example, where a statute requires disclosure of specified conditions or circumstances, such as known mold – and an element of uncertainty. Disclosure obligations should be taken seriously and not used as a smokescreen to hide problems that the Buyer may not discover until after escrow closes.
We help Buyers, Sellers and Realtors navigate these difficult waters. The disclosures often make the difference between a closed sale with a happy Buyer and a sale that ends in a non-disclosure lawsuit.