Posts Tagged ‘What can a seller lie about on a disclosure?’

What Can a Seller Lie About on a Disclosure and Get Away With?

Thursday, February 23rd, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

Trees might not be the only shady thing going on...

Trees might not be the only shady thing going on...

What can a seller lie about on a disclosure and get away with?

Well a seller can only lie and get away with it if you let him.

Does it happen, though?  Yep.

I don’t want to say it’s common–I won’t even say it’s uncommon–but sellers making paint-and-putty fixes to hide problems from inspectors and would-be buyers is the stuff of real estate lore.

I saw an online post the other day that kind of illustrates the problem.  I’ll quote from it:

I learned that the seller was lying about mold, saying there was no problem and has been no problem since he is the first owner of the property. I have since learned that he had the finished basement gutted, re-sealed and refinished again, only to have mold re-appear on some walls. Obviously, he knew there was a problem.

Just so you know, I’m not a lawyer and I can’t give legal advice, but here goes my take on this.

In Florida the seller has to make a buyer aware of “latent defects” that may not be readily observable and may matierially affect the value of the property.  In other words, a seller has to let a buyer know about:

Any defects in the home that the buyer can’t see just by looking around, and/or

Any defect in the home that the buyer can’t see that may affect the value of the home.

In the quote above the buyer is assuming that the seller knew about a mold problem.  They are assuming this because they heard from a neighbor that he had a basement gutted, sealed and then finished off.

Now, these buyers have no actual knowledge that the basement was refinished–no proof at all–just heresay.

But for the sake of argument let’s say the seller did have the basement gutted and refinished, and let’s also say it was because of mold.  And let’s also say that the work fixed the problem, at least as long as the seller was living there.

So if there was a problem and it was fixed, and it didn’t appear again, was there any “latent defect” to disclose?

I’ll put it another way: if a roof had a leak and you fixed the leak (and any problems caused by dripping water), would you disclose that?  Most sellers wouldn’t because the problem was fixed…in other words there was no latent defect to disclose if the roof was performing properly.

Now, in the gutted basement example above the buyer infers that the mold grew back.  Again this is based on heresay.

If the mold really did grow back…and maybe that was a natural and expected thing for a basement (there aren’t many in Florida so I don’t know)…and the seller knew it and didn’t disclose it, then he probably failed to disclose a latent defect.

Could the buyer sue him in this case?  Probably.  But I imagine they would not only have to prove that mold was growing back, but that it happened when the seller lived there and that the seller knew about it.

So did the seller get away with lying in this case?  Maybe.  But even if he got sued and won, he still had to pay for attorneys for the defense.

Wouldn’t it have made more sense just to write a single line about mold in a written disclosure and put it on the buyers to do their own inspections?

Would disclosing it have kept the house from beings sold, though?  Maybe to these people, but they were the type of people who might sue because they didn’t understand mold.

And if he disclosed it maybe his Realtor could have directed him to a person who could have affected a real cure?

Who knows!

I had one a few years back where a guy bought a foreclosed home, fixed it up, and then resold it.  While he was inspecting the home (while the home was still a foreclosure) he did a septic inspection which came back fine.  When he flipped the property he gave a copy of this septic inspection to the new buyers while they were doing their own inspections.

About a week or two after the new buyers moved in their agent called and wanted some money for a septic pump/lift station that wasn’t working.  The seller refused.

Why?

Well, because he did it right.

He sold the home in good faith.  He wasn’t aware of any latent defects when he sold it, in fact, the septic pump was working when he sold it.  He had that inspection prior to his purchase that cleared it.  And the buyers had the opportunity to do any and all inspections during their inspection period.  That they failed to do their own septic inspection, while instead relying on a months-old report from the seller, became their own problem.

It was in reality probably nobody’s failure.  Using an inspection report on the septic system, even if it was a few months old, probably was fine…nobody was living in the house, after all, that would create any stress on the system.  My guess it was probably stress on the pump from people living there that actually caused the problem (after all, the pump had hardly been used the entire time the house was in forclosure or in the resale process)…a new inspection wouldn’t have turned up anything anyway.

Contact St. Augustine Team at requestion@staugteam.com to get help keeping clear of shady deals, or just call Broker Sean Hess at (904) 386-8327.