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Do I Really Need to Disclose That?

By: Kacy Clouser, Esq. on in  | 

One of the hot topics on the legal hotline continues to be the Seller’s Property Disclosure Statement (Form SPD), and two specific questions have been coming up recently.

The first is, “Does the seller need to fill out the Seller’s Property Disclosure Statement if…?”

Well, as is the favorite answer of all attorneys is, it depends.

The Real Estate Seller Disclosure Law carves out 10 different exceptions, and all 10 are listed on the first page of the form. Apply the facts of this particular transaction to the listed exceptions to see if any of them give a legal reason not to complete the form. If the facts don’t fit, then a form is required.

The most common version of this question is the seller who says, “But I never lived in the property.” That’s not one of the listed exceptions, so that seller still needs to fill out a form. If the seller has slim actual knowledge about the property condition because he or she hasn’t lived there, it may be in the seller’s best interest to explain why the form may be less complete than usual, but the questions still need to be answered as completely as possible, which may include reviewing things like maintenance or repair records for the property.

This leads to a second common question, which is “Does a seller need to disclose an issue if it has been fixed?”

Typically, if a material defect was fixed during the current ownership of the home, it is best to disclose the issue with the explanation of the fix. This protects the seller by giving all knowledge to the buyer, just in case the issue was to reemerge after settlement.

Certain paragraphs of the SPD expressly require disclosing prior issues and any remediation efforts. For example, the section on basements and crawl spaces asks, “Do you know of any repairs or other attempts to control any water or dampness problem in the basement or crawl space?” (section 5(B)(2)), and then asks the seller to disclose “the location and extent of any problem(s) and any repair or remediation efforts” for any items identified in the section. Section 7309 of the law states that sellers may rely on reports from experts such as home inspectors or contractors (so long as the seller isn’t aware that the information is incorrect), so sellers may want to consider providing contractor reports rather than trying to summarize the repairs themselves.

When considering any of the above, remember that more disclosure is usually better than less disclosure, and that disclosing items during a transaction is likely to be less risky (and far less expensive) than explaining the lack of disclosure in a deposition after the transaction.

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Comments (10)

Comments

  • SANDY GOLDSTEIN   November 29, 2019 at 8:29 am

    I encourage sellers to do an inspection before they list so they can repair any major components of the house that could hamper the sale

    Reply to SANDY GOLDSTEIN
  • Renee Kunkle   November 29, 2019 at 8:45 am

    This artcle is so true. I always ask Sellers to dig out the paperwork for repairs that were made. That way the potential Buyer can contact the professional themselves. If it was a do it yourself repair, I tell Sellers to dusclose that and if receipts for the materials are available to make them accessible to the potential Buyer. Always remember both Seller and Buyet want the same thing, an amicable transaction.

    Reply to Renee Kunkle
  • Julie Diener   November 29, 2019 at 9:53 am

    Extremely helpful when we enter into those gray areas. This makes it very clear!

    Reply to Julie Diener
  • SCOTT D GELLER   November 29, 2019 at 9:59 am

    If you have to ask, “Do I need to disclose…” the answer is probably YES! Even if your seller falls into one of the 10 exempted situations, if you or the seller know of a defect, you MUST disclose!

    Reply to SCOTT D GELLER
  • Ruth A. Killian   November 29, 2019 at 5:05 pm

    DISCLOSE, DISCLOSE AND DISCLOSE IF YOU ARE AWARE. ((Sometimes things happen while a previous owner was in possession of the property and the present buyer may not be aware…….some of the properties we get to sell are owned for a short period of time).

    That scenario makes it difficult for a buyer to rely on the disclosure.

    Thank you for the article.

    Reply to Ruth A. Killian
  • Matthew Steger   December 2, 2019 at 1:40 pm

    Good article! A lot of the things that we (home inspectors) find during inspections are things that likely should have been disclosed from the start. The more things we find that were not on the disclosure, the more doubt in the buyer’s mind. The more honest a seller is up front, the more likely the transaction will smoothly proceed with fewer hiccups. Disclose, disclose, disclose.

    Reply to Matthew Steger
  • Daniela   December 2, 2019 at 5:36 pm

    I always find it so amazing that most disclosure reports that I see list an almost perfect house (even for homes owned for decades). Also, if there is an issue and they check “yes” most times they don’t follow up with an explanation. If there is a “yes” one needs to explain and fill it out. Surprised so many realtors just let this slide.

    Reply to Daniela
  • sharon odonnell   December 3, 2019 at 7:45 am

    Question: Does an Executor, Administrator, Trustee need to sign a Blank Seller Disclosure? On the last page of the Seller Disclosure it states that the Executor, Administrator, Trustee is not required to fill out the seller disclosure. But do they still have to sign this blank form and if so Why??? If there are know defects, repairs etc can it be disclosed on a separate letter written by the Trustee etc?

    Reply to sharon odonnell
    • Kacy Clouser, Esq.   December 3, 2019 at 2:01 pm

      There are two separate requirements for an Executor, Administrator or Trustee. There is the Seller Disclosure Law which has the exception, but there is still the common law requirement to disclose any known material defects about the property. By having the executor, administrator or trustee sign the SPD, it alerts the buyers of the reasoning as to why the form is not completed, and allows a spot for the disclosure of any known material defects. The SPD is not required, but typically is more efficient than a separate letter, but either can be done.

      Reply to Kacy Clouser, Esq.
  • sharon odonnell   December 4, 2019 at 5:48 pm

    Thank You.

    Reply to sharon odonnell

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