Real Estate Disclosures: Home Sellers…Tell The TRUTH!

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Real Estate Disclosures: Home Sellers…Tell The TRUTH!

Postby admin » Mon Jul 19, 2010 6:53 am

Real Estate Disclosures: Home Sellers…If You Don't Tell the Buyer Everything, Your Neighbors Will!


Most lawsuits in real estate transactions are the result of buyers feeling that the seller did not tell them all they knew about the house before they bought it. Most home sellers have no idea how easy it is to land in court with their home buyer. Properly following the outlined steps here can help.

When selling a home the home sellers have a very serious legal obligation to disclose in writing to the home buyer any and all defects that they know about the property.


Buyers look at a problem that was hidden from them as cheating them. Once they get legal counsel the nightmare begins- not only does the seller get sued, but it is common that everybody who was involved in the transaction gets named as co-defendant.

The attorneys for the buyer will paint a picture of the seller and his agent, the home inspector, and everybody else getting together and plotting their strategy to hide problems with the house from the buyer in court. Ugly words like deceit, misrepresentation, and fraud are used to describe what was and wasn’t disclosed. The new buyers will swear that they would have NOT bought this house if they had known the many "defects" it had.

When listing a home, your Realtor will provide you the necessary forms; it is up to you to fill them out completely and honestly. If you want to keep your money and stay out of court, follow these simple steps with care:

• Spend enough time looking over the Real Estate Transfer Disclosure Statements and make sure you understand every question before you answer it. The questions on these forms are geared towards making sure you don't miss anything important. Keep in mind that there will be a lot of people reading what you wrote: the home buyers, the Realtors, the attorneys... even the judge!

• Make sure you use the most updated forms available for these disclosures. There are changes to these documents every year, changes that are prompted by the new court decisions. There are thousands of dollars awarded to "injured parties" and their attorneys every year due to these forms not being filled out properly. One check mark in the wrong box could spell trouble.

• Do not allow anyone to fill them out for you-not the Realtor, not your children, not anyone else who is not on title. These are legal documents, treat them with care. Even if you know the buyer is a "friend" who you think you know, you still be treated as a "defendant" if your friend sues you.

• Tell the buyer everything you know about the house, especially if you are the typical DIY (Do It Yourself) type of seller. The rule is simple: "If in doubt, disclose it." A disclosure should be written in a clear and specific way: "... In 1997 there was a leak under the kitchen. We called ABC Plumbing and they fixed it" or "... around 2002 during El Nino rains, the basement flooded, a sump pump was installed by a plumber"

• If you did not take permits for any additions or structural modifications you made to the house, disclose that very clearly. These types of additions or modifications without permits are what put the new owners of the house at risk if they are not made aware.

• I always suggest to my sellers/clients to order a home and a pest control inspection before we put the house on the market. These reports do not only offer a professional opinion, but they also act as additional disclosures you provided the buyer.

• Don’t be shy about disclosing neighborhood noise problems or other nuisances. If you don't disclose that the area has problems with airport noises or garbage odors from a nearby dump, not only will the new owners find out within days of moving in, but your friendly neighbors will spill the beans as they welcome them into the area.

• Always make sure that you get a copy of your disclosures signed and dated by the buyers BEFORE ESCROW CLOSES. These signed documents are YOUR protection against future liability.

Buyers do not like to be surprised by material facts that they did not know. Every transaction in my office has a file that contains at least 30 different documents of disclosures. In my 25+ years as a Professional Realtor, I have had to accompany one of my clients (a home seller) to court regarding the answers he gave to a question in the Disclosures that read: Are you aware of any problems with the house before or during your ownership? He answered: NO. The key word here was: before.

The previous owners had disclosed to my client that the house had a problem with the foundation when it was being built... 35 years prior! The foundation had been reinforced and was better than any other home in the area, and no one had a problem while they lived there. The buyer, however, sued him for non disclosure.

After 2 years of depositions, thousands of dollars in lawyer’s fees, and countless sleepless nights, the arbitrator awarded the buyers $120,000. They used that money to upgrade the entire house since there was nothing wrong with the foundation. The legal fees for both parties were paid by the home seller.

How did the new owner find out? The neighbor greeted the new owners as they unloaded their belongings, and she told them the house’s…how the foundation gave way and how that it had been fixed. The new buyers felt they should have been told and they consulted an attorney.


As you can see, you do not have to necessarily do anything wrong- all you have to do to get into legal trouble is to not pay attention when filling out The Real Estate Transfer Disclosure Statements. If you are in the middle of a transaction and escrow has not closed yet, go back and submit an amended document if you missed something. Even if you have to renegotiate with the buyer, it is a lot cheaper than facing him in court. Good Luck... and good reading too!

About the Author:
Antonio & Alexia Cardenas
CRS, GRI, E-Pro Certified. SFR (Short Sales, Forclosure Resource) Serving the east shores of the San Francisco Bay, Alameda county: specially the following cities: Castro Valley, San Leandro, San Lorenzo, Hayward, Oakland, Pleasanton & Dublin.


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