Generally speaking, a seller only has to disclose defects which are within their personal knowledge. However, a seller’s duty to disclose defects is often governed by state law so it is important to check your state’s property and real estate laws before selling your house.
A seller is not required to bring in a general contractor to look for defects but a seller may hire a general contractor to become aware of all the defects and the potential cost of repairs and also to help in preparing any required disclosures.
Sellers are required to disclose defects which they had knowledge of at the time of purchase and these are also known as latent defects. However, defects which sellers do not have knowledge of but which they could discover if they made a reasonable search are known as patent defects and sellers are not required to disclose them unless they actually made the search and were aware of these defects.
Sellers have to disclose defects which are material which means that they affect the value of the property or they would affect the buyer’s decision. Some examples of material disclosures and defects include:
Because the duty to disclose defects is often governed by state laws, the requirements can vary depending on the state that you live in. In some states, sellers are only required to disclose known defects with a property if they are specifically asked about them.
However, the rules in California are much more stringent and a seller of real property has to disclose any known defects which materially affect the value of the property or which affect a potential buyer’s desire to purchase the property.
Under California law, the seller has an affirmative duty to report any defects and the buyer does not have to ask about the conditions on the property to learn of such defects. Whether a defect is considered material depends on the characteristics of the property and the statements made by the buyer to the seller.
If the buyer would not have purchased the property if they had been properly informed of the defect, the defect is generally considered material. Also, the duty is ongoing in nature so the seller is required to report any problems until escrow closes and the seller must also provide a transfer disclosure statement to the buyer which provides a checklist of some of the most commonly experienced conditions on the property and required disclosures.
For example, under California law, many different remedies are available to a buyer if the seller did not provide proper disclosure. If the buyer can prove that the seller had known about a defect but failed to disclose it, the buyer may be entitled to the following damages:
If you are considering buying or selling a property and you believe that the seller was not honest in disclosing defects of the home, then it would be beneficial to consult a local real estate attorney before proceeding. It's important to first contact the real estate agent and ask if there are any withheld defects, to find out if there is any other information and remedies you might have before contacting a lawyer.
Last Modified: 05-22-2018 11:36 AM PDTLaw Library Disclaimer
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