Disclosures Made by Sellers

July 1, 2021 | Buyer Insights

Buyers and sellers are obligated to make accurate disclosures and representations when buying and selling real estate. For buyers, this primarily entails dealing fairly and honestly with the seller and not misrepresenting the buyers ability to obtain a loan.

Things are a little more complicated for sellers. Sellers are obligated to disclose latent property defects to buyers. A latent defect is one that is not obvious on inspection. A broken window is not a latent defect — you can see it. On the other hand, a window that leaks water every time it rains is an example of a latent defect.

Sellers are only obligated to disclose latent defects when they have actual knowledge of such defects. For example, a roof may be leaking into the attic but the leak is not bad enough to have caused water stains on the ceiling or walls inside the house. It is a latent defect but the seller would not disclose it because he has no actual knowledge of the leak.

While you are legally entitled to rely on any disclosures made by sellers, CHR agents view every disclosure skeptically. We take this view for several reasons.

In our experience, the disclosure process is handled very poorly. We do not think that sellers are adequately informed about the extent of their disclosure obligations and the disclosure process is not given the time and attention it deserves. In addition, there can be legitimate questions about exactly what constitutes a latent defect. As stated above, defects may also be present in a property without the seller’s knowledge.  

Sellers and agents are also responsible for making accurate representations about their properties. For example, when a seller or seller’s agent reports square footage or home owner association amenities, they have to use reasonable care to make sure that such information is correct.

Because mistakes can easily be made, we strongly urge you to independently verify any facts that are crucial to your buying decision. A good example might be school assignments. If having your kids attend a particular school is critical to your buying decision, you should call the school district and verify that the desired school is the one the kids will actually attend – and that the assigned schools are not changing in the next year!

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