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Seller Disclosure: What Prospective Buysers Need to Know


The Importance of Being honest about your home's defects.

Although naturally you want to sing your home's praises to prospective buyers, legally you have to be just as forthcoming about its flaws. That's what "seller disclosure" is all about. Your real estate attorney can probably give you real live examples (like the one below in "Florida's case for seller disclosure") of how not disclosing defects can come back to bite you. For now, keep reading this page if you're curious about:
  • Florida's case for seller disclsoure
  • Examples of defects you should disclose
  • How to head off problems at the pass
  • What happens if you don't disclose defects
  • Why you're better off telling

Florida's case for seller disclosure: Why you are legally obligated to be forthright.

In 28 states, there are laws on the books requiring home sellers to inform buyers about anything in disrepair that affects the property's value in a negative way. Florida case law supports the same principle of keeping sellers honest. In the 1986 landmark case Johnson vs. Davis, the Florida Supreme Court found that sellers cannot conceal material defects. In that case, some prospective buyers were looking at a home and noticed evidence of a roof leak. When they asked about it, the sellers admitted there was a leak long ago but that it was completely repaired. Before closing on the house, it rained, and the buyers discovered that the roof was still leaking. They sued to get their deposit back and won.

Examples of defects you should disclose when selling your home.

In addition to apparent defects, you must disclose any material defect not readily visible to the buyer, like a crack in an exterior wall hidden by a bush. Not only should you respond honestly to buyers' direct questions about the condition of your home, you should readily volunteer any problems, including information regarding:
  • Malfunctions in the major systems of your home, such as the foundation, plumbing, electrical system, heating and air conditioning, siding, windows, doors, walls and ceilings
  • Damage to property due to fire, floods, hurricanes, sink holes, etc.
  • Environmental hazards such as lead-based paint (for homes built before 1978), asbestos, radon gas, contaminated soil or water
  • Problems with termites and other critters
  • Work done without building permits, such as wiring an outdoor speaker system yourself, or carpentry or plumbing jobs
  • Owners of condominiums and properties located in subdivisions must supply the buyer with appropriate CC&Rs (Covenants, Conditions and Restrictions) and bylaws and fees set by the Homeowners Association.
Note: Since there is no seller disclosure law on the Florida books (yet) detailing exactly what must be shared with buyers, it's wise to consult a real estate attorney if you have any questions. He or she can give you all the information you need before you put your home on the market.

Hire an inspector to avoid headaches later.

Before you put your home on the market, hire an inspector to find out what's wrong with your home. Burying your head in the sand won't do any good, because a prospective buyer's inspector will likely discover any problems. If not, surely the buyer will find them later, and then you could be in for a lawsuit.
By the way, you only have to admit the defects; you don't necessarily have to fix them. Say your inspection turns up some faulty wiring. You can either have it repaired, or simply let it become a negotiating issue with the buyer. For example, you can offer an allowance off the sale price and let the buyer deal with the problem. As long as you disclose the defect, you are not liable if the buyer chooses not to make repairs.

What can happen if you choose not to disclose defects?

Simple answer: The buyer can sue you for fraud.
Like the dentist who warns you to floss so more drastic procedures won't be required later, your real estate attorney prefers to advise you on this issue now rather than clean up a legal mess later.

Disclosing defects when selling your home is the only option.

Disclosing your home's flaws up-front to a buyer may feel a little like confessing all your personal problems on a blind date! In the world of love, it may not be the smart thing to do. But in the world of home selling, it does more good than harm. Most of the time, a buyer who is truly interested in your home will use the information only as a negotiating point.
Besides, you'll want to be treated in the same honest, forthcoming way when looking for your new home.