We've heard them all - awful stories involving nasty lawsuits. Virtually in all cases, these lawsuits are brought about by buyers, after purchasing a home, upon discovery of damages not previously revealed by sellers. A buyer in Pleasanton, California found out after purchasing a property that the roof leaked during a rainstorm 2 years back. Another buyer in Oakland, California was surprised that what appeared to be a clean, well maintained basement was actually getting flooded after overnight rains. And so on...
In these situations, the seller disclosures, signed by both seller and buyer, can prove to be the most critical piece of document that will spell the difference between winning a lawsuit for the buyer, or serving as protective net for the seller. Consequently, a lawsuit won by the buyer means that the seller will be required to correct or cure the material defect not disclosed, not to mention the potential liability for other compensatory damages. The buyer is stuck with a house that he would not have purchased had he known that the basement floods during rainstorms, or had he known that a person had died in the property within the last 3 years (in the latter case, nothing can correct this fact!). Cost implications to the seller could be immense for withholding information on material defects or ignoring mandatory disclosures on a property.
So why would a seller not disclose? Concealing negative information about a property creates uncertainty to the seller that the house may not sell. Or the seller feels it is too minor a defect for it to matter in a sale transaction, and decides it is not worth disclosing. One seller felt it was best not to reveal that the living room and bathroom were once exposed to flooding due to construction debris that clogged the water pipes; the builder had since quickly repaired the damage, i.e., cleaned up the debris, replaced the carpets, repainted the affected rooms. There was no sign of any water damage since, and the seller felt disclosing will only be a sale spoiler. Against the seller's better judgment, the Realtor's advice prevailed and this was disclosed to the buyer accordingly.
An experienced Realtor will always coach the seller never to take too lightly the importance of disclosing.
Awarding the property to the highest and best offer is always the best selling strategy. But no matter what the sale price is, this may ultimately be unprofitable after all if the seller has to pay back the purchase price to settle a lawsuit. And it could have been prevented by including a line or two on the disclosures.
So, when in doubt, DISCLOSE!!
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