You may not know exactly how much to tell the potential buyer of your home about the property. Disclosure to potential home buyers about problems and issues has been a much-debated subject. Many areas have laws that require certain disclosures to be made at the time the real estate contract is entered into.
Seller Disclosure Laws
Caveat Emptor — “let the buyer beware” — used to be the law when it came to real estate transactions. Unless the buyer specifically asked about the defect, the seller didn’t need to disclose any problems.
Although, over the years, the Courts noticed that this was unfair. Car buyers get to test drive cars, so why should home buyers be so blind? If a seller knows about a problem in the home, the problem should be corrected or disclosed to a potential buyer.
Modern consumer protection acts have led to disclosure requirements for sellers.
Although the laws vary from place to place, the purpose of these disclosures remains the same. Sellers of residential real estate must disclose to their purchasers any known defects or information concerning the water and sewer systems, insulations, structural systems, plumbing, electrical, heating, and air-conditioning systems, fixtures and much more.
These laws require the seller to complete a disclosure form at the time the real estate purchase contract is entered into and give it to the purchaser. If the purchaser has not received the form, he or she will have the right to terminate the contract and receive a full return of the earnest money.
What’s Included In A Disclosure?
The courts have ruled that even land discovered to once be a graveyard or a scene of a heinous crime must come with a disclosure.
For example, in 1964, Mr. Louis Hickman created and recorded a piece of land that was once a graveyard. Mr. Hickman had removed the tombstones and all other surface evidence, leaving the graves underground.
In the ’80s, a couple built a house on the lot. Fifteen years later, they discovered the graveyard.
The case (Carven vs. Hickman) used the Statute of Repose. This statute is designed to protect builders from perpetual liability for defective conditions due to the improvement of a property. The graveyard did not count as an improvement and did not protect Mr. Hickman from liability for the “defect”.
This case isn’t your technical lack of disclosure case, but it gives you an idea of what you should disclose — everything. Otherwise, thirty-one years later, you or your estate could be sued for non-disclosure.
Caveat Emptor has no place in today’s real estate market. Disclosure of all known problems isn’t just being honest, it is beneficial for the home seller. You can protect yourself from litigation by simply stated everything. Yes, the price might drop a few hundred dollars, but it may save you tens of thousands in lawyer fees later.