Importance of Seller Disclosures

    It sounds like a spooky story to tell around the campfire, but for these home owners it was more than a tale of terror. It demonstrates the importance of full-disclosure when selling your home, and getting a thorough inspection when purchasing a home.

    In October of 2007 Brian and Susan purchased their dream home. It was roomy, cozy, and just what they always wanted. One day when Susan was in the shower she caught a glimpse of something out of the corner of her eye. She recoiled in terror just in time to avoid a brown recluse that dropped from the ceiling. She watched its legs twitch and grasp at here before it was washed down the drain.

    Soon the spider appearances became more and more frequent. She says the spiders started “bleeding out of the walls”. A leading researcher estimated there were between 4,500 and 6,000 spiders in the property. This estimate, he admits, was very low because it was made in the winter when the spiders were mostly dormant.

    Their dream home had become a living nightmare.

    They did everything they could to eradicate the infestation, including hiring multiple pest control companies, but the spiders kept coming back. They filed a claim with their insurance company in 2008 and a lawsuit against the previous owners for not disclosing the spider problem. A court ruled in their favor and required the previous owners to pay $472,000 in damages and the family moved out of the house.

    When a home is sold in Utah it is state law that the current owner disclose certain things about the home to the buyer. This is so the buyer feels comfortable buying the home, and to protect the seller from damages that happen after the purchase. Conditions not properly disclosed can come back to haunt the seller.

    Even though disclosure requirements seem minimal, many Utah sellers provide more information than required to avoid legal liability. On the other end of the spectrum we have had sellers disclose anything and everything that has ever happened. There is a balance between these two extremes. One advantage of having a real estate agent is the sellers disclosure-form which helps sellers disclose what is necessary for the sale of their home.

    What are you required to disclose?

    • If your home is older than 1978 you must disclose the possibility of lead-based paint. This is a federal requirement and the Salt Lake Board of Realtors has drafted a legal contract specific for this cases.
    • Another requirement is that you disclose if the property is currently contaminated from the use, storage, or manufacture of methamphetamines”. If the home has been decontaminated the owner does not need to disclose that the property was once contaminated.

    Don’t have to disclose if “stigmatized”?

    • If the home stigmatized it does not have to be disclosed. That means it does not need to be disclosed if the property is the “site or suspected site of a homicide, other felony, or suicide.”
    • Nor does it have to be disclosed if it was “the dwelling place of a person infected, or suspected of being infected, with the Human Immunodeficiency Virus [HIV], or any other infectious disease that the Utah Department of Health determines cannot be transferred by occupancy.

    Most real estate agents have a standard disclosure-form to help sellers disclose what is necessary for the sale of their home. However, in most cases the real estate agent is not liable if the form is filled out incorrectly, or if the seller lies on it. In Utah, lying on the seller’s disclosures is considered fraud. Failing to disclose a material defect is considered fraudulent nondisclosure. This was what happened with the spider story above. The seller did not disclose the existence of 4,500 – 6,000 brown recluses in the attic and walls of the home.

    It is true that some issues may not have come to your attention, and if that is the case you are not responsible to disclose them. The key is whether you knew about the problem, or should have know about the problem. Most buyers will hire an inspector to look over the home before purchasing. If there are any hidden defects that the inspector misses, but you should have known about by living in the home, you are responsible to disclose it.

    It is important to protect yourself when selling a home. The sellers disclosure-form provides a wide range of information to help you know what to disclose, and helps the buyer feel comfortable with the purchase. Some of items you may see on the disclosure include:

    • zoning or legal violations
    • legal actions affecting the property
    • location within a Greenbelt
    • damage to the roof
    • past-due utility bills
    • problems with the culinary water
    • damaged sewer or septic tanks
    • damaged heating and cooling devices
    • damaged equipment
    • damaged features
    • damaged appliances
    • damaged fireplace or stove
    • termite damage
    • rot
    • mold
    • remodeling that affects a significant portion of the home
    • structural defects
    • boundary disputes
    • easements
    • electrical defects
    • water damage
    • hazards
    • toxins
    • location within the governance of an HOA (home owners association)
    • past-due HOA bills or assessments
    • property damage claims reported to an insurance agent

     

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