Real Estate Form 2: Property Condition DisclosureThe Seller’s Disclosure of Property Condition form is intended to have the seller fully disclose to the buyer any and all property defects or conditions that warrant repair. At one time, the Latin term caveat emptor was used as the prevailing rule. The term means let the buyer beware. In other words, it was up to the buyer to use the process of discovery to detect any repair the property may have been in need of, and the seller had little to no obligation to disclose anything. The courts have in recent years begun to lean more toward protecting the buyer and placing a much greater burden on the seller than they have in the past. The prevailing law now requires sellers to disclose known property defects to the buyer. Depending on what is wrong with the property, the seller may claim that she was unaware of a particular condition that the buyer discovered after closing and taking possession. In a situation like this, the buyer must be able to present compelling evidence that the seller was in fact aware that the defect existed. The Seller’s Disclosure of Property Condition is presented in five sections and requires the seller to make the information available to the buyer after filling out the form in its entirety. Section 1 of the form contains a checklist of items such as appliances, HVAC equipment, pools, fences, and other items that are to be included with the sale of the house. The seller is required to address each item on the form by writing yes, no, or unknown in the appropriate blank. It also asks the seller to disclose any known defects in the items listed in this section. Section 2 addresses structural items such as walls, roofs, foundations, and windows, and again asks the seller to disclose known defects with any of these components. Section 3 asks the seller to provide information regarding damage from termite infestation, water damage, toxic waste, radon gas, or other such conditions. Section 4 asks the seller once again to disclose any item that is in need of repair. Finally, Section 5 addresses the seller’s awareness of known modifications to the house or any of its structural components such as room additions. It also asks the seller to provide information regarding homeowner’s association fees, maintenance fees, or lawsuits that may be pending against the seller that may adversely affect the sale of the property. The safest way to protect yourself as the seller is to be honest and disclose all known defects to the buyer up front. If you have accurately and honestly filled out the Seller’s Disclosure Form to the best of your ability, and the buyer has received and signed a copy of it, then you should have nothing to worry about from the standpoint of being sued at some future date. The purchaser’s signature on the disclosure form is a legal acknowledgment of his or her awareness and acceptance of the property’s condition at the time of sale. Furthermore, buyers have the opportunity to order a home inspection by a certified inspector if they choose. If this right is waived at the time the purchase agreement is completed, and the buyer accepts the property “as is,” then he or she also waives all rights to future litigation. Think about it. If you have openly disclosed all known defects and the buyer has waived the right of inspection and has furthermore agreed in writing that he or she is willing to accept the property in its current condition, then there is no legal ground for him or her to stand on in the event a defect is discovered after the sale. The Seller’s Disclosure of Property Condition is an absolutely essential form that must accompany the sale of single-family residential property. Complete this form as accurately and honestly as you can; be sure the buyer has signed and received a copy of it; and you should have nothing to worry about! |