Most states require a seller disclosure agreement when selling residential property, and some do for commercial real estate. Regardless of whether it is required by law, these agreements enable the seller to inform the buyer about the property’s relative health. The statement is often a form with several pages of questions that the seller ideally answers truthfully. These may include facts or information that the buyer had not asked for. This can protect the seller from later legal action.
The seller has obligations
Generally speaking, the seller must answer to the best of their ability all the buyer’s questions. They also have the duty to disclose facts to previous statements from being misleading or misrepresenting the current condition of the property, which may change over the transaction. If they do not do this, they could be held liable for preventing the discovery of any property defects.
Some examples of defects include:
- Material defects: This would include cracks in the foundation or wiring that is not up to code.
- Hidden defects: A potential for flooding after heavy rain would be an example.
- Environmental radiation standards: The seller or their agent must reveal the presence of toxic substances, including radon, as well as violation of local, state and federal environmental standards.
- Coastal property: The seller must disclose information about the erosion of beachfront property.
- Mandatory memberships: The buyer must be made aware of homeowner association memberships and other obligations.
Not a one-way street
The buyer may also be obligated to disclose certain information. This would include facts that are essential to the buyer’s ability to purchase the property. Failure to do so may constitute a misrepresentation or even fraud.
Resolving issues in dispute
While buyers may have questions about the information on a seller’s agreement, sellers may have worries regarding what they need and do not need to share with the buyer legally. A real estate attorney with experience handling disputes can be beneficial during the traction or after the deal. Ideally, they can help the two sides resolve disputes without litigation, but they can also protect a client heading for court.