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Should You Tell Everything when Selling?
Should You Tell Everything when Selling?
By Martin Lukac
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 actually have laws that require certain disclosures to be made at the time the real estate contract is entered into.
Personally, I tell all. Everything from the once or twice the wind blew down the chimney the wrong way one windy spring to the small little hole in the guest room window screen. Nothing is too small and nothing is to large.
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.
But 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 diclosures remain 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 recieved the form, he or she will have the right to terminate the contract and receive a full return of the earnest money.
What is considered a defect? Must it be something large? Do bones in the backyard really qualify as a defect?
Yes, they do. The courts have even ruled that 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 80's, 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 basically 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.
Copyright 2006 #1 Loans USA
Martin Lukac, represents, #1 Loans USA(http://www.1LoansUSA.com), a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more: info@1LoansUSA.com
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