Published Date 1/9/2019
Most of those selling their homes know they will have to disclose any major problems to potential buyers—things like a foundation crack or areas where leaks or flooding occurs, as well as mold. But how do you know if you’re covering all the bases when you offer disclosures about your home?
What about the stuff you don’t disclose that has the potential to land you in a lawsuit to cover repairs years down the line, long after you’re gone? Realtor’com Warren Christopher Freiberg reports that disclosure laws are very state-specific. What a seller has to disclose in one state isn’t necessarily something that needs to be disclosed in another—much to the chagrin of buyers.
For example, one state may require you to disclose that your home was once the site of an illegal meth lab another one won’t. “The thing about disclosure is that you aren’t required to disclose what you don’t know, so sometimes looking too deep into the history of your home can be a bad thing.” says Freiberg.
Did you know that many states have laws that require sellers to disclose facts about whether the property is “psychologically affected?” This typically means disclosing if someone has died in the property within the past few years. In California, the period of time to disclose deaths in the home is three years. But sometimes you need to go into detail about how they died, too.
One Realtor mentioned in the article told of how he was selling a property on behalf of an estate. “The owner died in the house and that was disclosed. What was not disclosed was the fact that he was violently murdered. There was some vague language for the potential buyer to ask for more info.” That vague language eventually became a costly mistake for the seller, with the seller having to fork out $15,000 in settlement money plus another $15,000 in attorney’s fees.
Can buyers choose their neighbors? Perhaps not, but they sure know bad ones when they see them or, in some cases, hear them — those who constantly have ear-splitting parties, don’t pick up after themselves, or let their pets run wild. So how much of this does a seller need to disclose?
“It’s debatable,” says Freiberg. “No state has a specific law on the books requiring you to spill the beans about your appalling neighbors. Because it’s all subjective, right? You might barely notice that your neighbor’s terrier barks at all hours of the day and night, but it could drive the person who buys your home legally insane.”
In California, however, sellers are required to disclose any major nuisances in their neighborhood. You could be liable for not having disclosed that your neighbors routinely threw parties until 2 am every Saturday night or if their dog barks constantly.
“A sewer backup is something that you’re almost certainly going to have to disclose, but sometimes buyers need to dig into what that disclosure really means,” says Freiberg. He uses the example of a Georgia law that requires a seller to disclose issues inside the home, but not issues in the home that are caused by problems that are off-site. In this case, the buyer purchased a home where the basement had been recently finished and that the cause of the original damage was a sewer backup. Naturally, the buyer assumed the sewer line was fixed. But just a week after the home was purchased the basement flooded with sewage again. It turned out that the problem was not with the sewer line from the street to the house, but with the county itself making mistakes, flooding all the houses on the street.
This is a case where the buyer is helpless and can’t sue the seller for damages resulting from nondisclosure. “It was kind of a shady move for the seller to not disclose the full problem, but he was in the right legally,” says Freiberg.
Most Realtors, however, look for things to be disclosed and prefer to come clean with any problems, making them either a point of negotiation or something either the seller or the buyer would fix or sign off on.