Across the Picket Fence - Property DisclosureReturn to article list
Across the Picket Fence
Topics: Pricing | Contracts | Disclosure | Offers | Financing | Buyers | Agents | Buyer Issues
Q: What is the seller legally required to disclose about the property to the buyer?
Lawyer: The seller has to disclose anything that is undetectable, such as a history of problems (or current problem) with the sewerage system, water in the basement, a hole in the wall that is covered by a wall hanging, burn in the carpet covered by a throw rug, etc. Also, any specific questions that the buyer asks must be answered truthfully. Obviously, property disclosure forms must be filled out truthfully, to the best of the seller's knowledge. The buyer should request a property disclosure be filled out by the seller, and should also have a home inspector evaluate the property.
Recent laws have been passed concerning lead paint disclosure, that will go into effect irequiring that sellers disclose to buyers whether or not the property has been painted with paint containing lead.
Q: What happens if the buyer's financing doesn't come through in time for the closing? Is the contract still legal?
Lawyer: Yes. Unless you put "time is of the essence" on the contract, the closing date is not considered to be of importance by the court.
Q: Seller: We have an offer that is contingent upon our buyers' selling their home first. Is it possible to keep advertising and showing our home incase they aren't able to sell their home?
According to our attorney, it is legal to continue to advertise and show your home, as long as the buyer agrees to this as a condition of the contract. Any other parties inquiring about the house should be told upfront that it is under contract and when the contract expires, as well as what the terms are (eg. contingent upon the other party selling their property by June 1). You should then encourage them to come view your home so that they will be in a position to react quickly if the other contract falls through. You'll find that many people don't want to see a home once they learn that it's under contract, though. They may ask you, instead, to call them if the contract falls through. Either way, you have a valuable lead if you should need it.
Seller: What happens if I fill out the property disclosure form and give it to my buyer, and there is a defect in my property that I'm unaware of? Am I still legally responsible?
Lawyer: In most cases, no. However, if the buyer discovers a problem after the purchase that they believe you were aware of, or should have been, they can still sue you. They would then have to prove that it was reasonable to assume that you were aware of the problem.
An example would be if the buyer discovered that the well water had an odor and was undrinkable due to bacterial content shortly after the purchase. Even if you testified that you thought the water was fine and had been drinking it without any health problems, the court might rule that you should have been aware of the odor, and therefore should have had the water tested. You could then be held responsible for correcting the problem and pay all of the buyer's legal fees, or worse, to have to reverse the sale of the property -- i.e. repurchase the property back from the buyer if the decision is that the property was not in habitable condition.
It should be noted that you are no less responsible if a real estate agent is involved in the sale of your home. It is the seller who is responsible to disclose property defects. In fact, if an agent is negligent in disclosing a defect to the buyer that you had made the agent aware of, you are still legally accountable for the omission.
Property Disclosure, Buyer
Q: Buyer: Isn't it risky buying direct from a homeowner without an agent? What if the Private Sale homeowner isn't disclosing the full truth about the property?
No. Since most real estate agents are representing the seller in a transaction, they are not looking out for your interests anyway. They are trying to get the best price for the seller (the exception is the buyer broker, who represents the buyer). However, both agents and homeowners are legally required to be truthful when disclosing facts about the house.
When you purchase a home with the assistance of an agent or on your own, it is quite standard to ask the homeowner to fill out a disclosure form about the property. Whether you are purchasing direct or with an agent, you still must rely on the homeowner to give you the details about the property. Also, you can make your offer contingent upon a satisfactory housing inspection (which you arrange and pay for). The attorney that draws up the Purchase/Sale contract can advise you on this or other matters, and will specify any special conditions of the sale that you and the seller decide upon.
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