The Michigan Supreme Court recently affirmed a Michigan Court of Appeals decision (Roberts v Saffell) which overturned the lower courts decision that a homeowner was liable for undisclosed (unknown) termite damage. In the original court ruling the homeowner was held liable for undisclosed termite damage when the new homeowner discover extensive damage to the structure of a home located in Leland, Michigan.
The homeowner did not disclose any prior knowledge of termites but did say they had had some bug infestation. The buyer of the home took that to mean that the homeowner was aware of termites and sued for monetary damages and as I said won. The Michigan Court of Appeals determined that a claim for innocent misrepresentation (which allows liability for false statements even when a person making the statement is unaware the statement is untrue) can not be brought for a false statement listed on the Seller's Disclosure Statement if the statement is not within the Sellers personal knowledge and ordinary care was taken at the time the statement was made.
While it is still very important to make sure you as a seller fill out the Disclosure Statement as accurately as possible, you no longer have to worry about being held liable for something that was beyond your scope of knowledge. This case had cause d quite a scare until this recent Court of Appeals decision.
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