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What are a Seller’s Disclosure Obligations When Selling Property?


When you purchase property, there is a seemingly unending list of disclosures that are made to you, and documents that you have to sign. You may think that when purchasing property that anything that would alter the value of your property in a negative way would have to be disclosed to you (or that if you are the seller, you have an obligation to disclose absolutely everything). But the laws about what has to be, and what does not have to be disclosed to real estate purchasers is more complex than you may think.

Silence Isn’t Golden

First, forget about the notion that a seller can just remain silent, and have no liability to a buyer if there is a problem with the property. A seller cannot defend a lawsuit by claiming that they didn’t say anything false because they didn’t actually say or disclose anything at all. Note that this was the law in the mid 80s, but it has not been the law since then.

What Has to be Disclosed?

A seller has to tell a buyer about anything related to property that:

  1. Would materially affect the value of the property, and
  2. Which is not readily observable or known to the buyer of the property

There is no obligation to disclose any defect or problem which has been fully repaired or cured. That means that, for example, a water leak which was discovered, and repaired, and which has not leaked since the repair, need not be disclosed. It could also include termite or vermin infestation that was eradicated.

However, you may have to disclose that, say, someone died in the home, or that a crime was committed in the home, if that would negatively affect the value of the property.

This makes some sense—if a seller had to disclose every single defect that was repaired and no longer exists, the disclosures needed—and likely, the litigation related to making or not making those disclosures—would be enormous.

No Model Forms

Believe it or not, despite these obligations to disclose, and despite the mounds of paperwork signed and exchanged at a typical real estate closing, there is no one model form for disclosures of defects, although some professionals (such as some realtors or real estate agents) have their own forms.

Because there is no one standard form, a seller may need to make decisions about what is disclosed and what is not disclosed. Disclosing too much (that is, disclosing items that don’t legally have to be disclosed to the buyer) can create as many problems as disclosing too little.

Remember that oftentimes, professionals like real estate brokers may want a seller to disclose more than what needs to be disclosed, in order to protect the broker. However, the “over disclosure” can end up ruining what would otherwise be a problem-free real estate sale.

Call the West Palm Beach business litigation lawyers at Pike & Lustig to help with any contractual or real estate litigation problems that you may have.

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