Real Estate Disclosures: Home Sellers: If You Don't Tell the Buyer Everything... Your Neighbors will!

By
Real Estate Agent with Alameda County - San Leandro, CA.
http://actvra.in/4jxK

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. A few steps outlined here can help, if followed properly.

When selling a home, by law, the home sellers have a very serious obligation of disclosing in writing to the home buyer any and all defects that they know about the property. www.listedbyantonio.comBuyers 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 gets sued, most of the time, everybody that was involved on the transaction gets named as co-conspirator.

In court, the attorneys for the buyer will paint this picture of the seller and his agent, and the home inspector and everybody else getting together and plotting their strategy to hide problems with the house from the buyer. They will use ugly words like Deceit, Misrepresentation, Fraud, etc, to describe what you did or did not write in your disclosures. The new buyers will swear that they would have NOT bought this house had they known the many "defects" it had.

Your Realtor will provide you the right forms, it is up to you to fill them out, completely, truthfully and seriously. If you want to keep your money and stay out of court, follow these simple steps with care:

  • Spend time looking over the Real Estate Transfer Disclosure Statements and make sure you understand every question before you answer it. The questions in 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, attorneys... event the judge!
  • Make sure you use the most updated forms available for these disclosures. There are changes to these documents every year, those changes are prompted by the new court decisions of the most recent cases. There are thousands of dollars awarded to "injured parties" and their attorneys every year because these disclosures were not 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, or your children or 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, specially if you are the typical DIY (Do It Yourself) type of guy/gal. 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 is what puts the new occupants of the house at risk if they do not know.
  • 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, when provided to the buyer do not only offer a professional opinion, but also act as additional disclosures that you, the seller, provided to the buyer.
  • When it comes to disclosing neighborhood noise problems or other nuisances, don't be shy, if you don't disclose that the area has problems with airport noises, or garbage odors from a nearby dump for example, not only would the new owners of the house will find that out within days of moving in, your friendly neighbors will spill the beans just as they greet the new owners with a courtesy visit to 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. In my office, every transaction has at the end a file that contains at least 30 different documents of disclosures. In my 25+ years as a Professional Realtor, I have had to accompany once, one of my clients, a home seller to a lawsuit 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 him that the house has had a problem with the foundation when it was being built... 35 years before!,The result of that problem was that the foundation was reinforced better than any other home in the area, and the previous owner nor my client ever had a problem while they lived there. The buyer, however, sued him for non disclosure.

After 2 years of depositions, thousands of dollars in lawyers fees, and countless sleepless nights, the arbitrator awarded the buyers $120,000. Which they used to upgrade the entire house, because there was nothing wrong with the foundation. The legal fees for both parties were paid by the home seller.

But how did the new owner knew? The neighbor across the street come to greet the new owners, and as they unloaded their belongings, she told them the history of the house, and how the foundation gave way, and how it was fixed. The new buyers felt they should have been told, consulted an attorney who made a case and got some money from the seller.

www.listedbyantonio.com

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 do an ammended document if you found out that you missed something. Even if you have to renegociate something with the buyer, it is a lot cheaper than facing him in court. Good Luck... and good reading too!

Posted by

The Realtors In Motion       Antonio & Alexia Cardenas   

                  "The Realtors In Motion" 

         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.

                  Visit us on line at:

www.listedbyantonio.com or call (510) 326-4263

                     Call us, We'll come and TANGO with you!

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Donald Bradbury 05/30/2010 01:31 AM
  2. Jason Killam 05/30/2010 06:25 PM
  3. Christopher Webster 05/30/2010 07:11 PM
  4. Barbara Kornegay 05/30/2010 10:45 PM
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Rainmaker
194,583
Antonio & Alexia Cardenas
Alameda County - San Leandro, CA. - San Leandro, CA
"The Realtors In Motion"

Thanks guys and Gals for your input. I always believe that if we tell EVERYTHING WE KNOW about the house to the buyer, while we are discussing price and terms, most likely the buyer will go along with it. PUT EVERYTHING ON THE TABLE AT THE BEGINNING... and nobody gets hurt.

More important for us Realtors is the fact that WHEN THE SELLER GETS SUED... THE BROKER AND THE AGENT GET NAMED AS "DEFENDANTS" ALSO. So if the seller is not careful and the Realtor does not check the forms for missing answers or unchecked boxes, or even further explanations, then we are as responsible in front of the judge almost as if we were the seller.Thanks for your visit again.

Antonio

 

May 30, 2010 04:27 PM #29
Rainer
137,360
Jason Killam
Only Way Realty - Myrtle Beach, SC
Make Every Moment Count!

Disclosure, Disclosure, Disclosure!!!

 

Inspection, Termite report, Survey as well!

HOA report if a condo!

May 30, 2010 06:27 PM #30
Rainmaker
166,350
Wendy Rich-Soto Realtor,Real Estate Coach & Consultant
Keller Williams Realty, LA Harbor - San Pedro, CA
"Bridging Your Way Home"

Sellers, let it all hang out!  If you are truthful about all you know about your home, you can sleep easy at night.  Having nothing to hide is a great feeling!  Looking over your shoulder, not so much!

May 30, 2010 08:06 PM #31
Rainmaker
2,030,661
Richard Weeks
Dallas, TX
REALTOR®, Broker

You can not get in trouble if you over disclose.  You must walk away if you know the seller is trying to hide something.

I think this picture says it all.

May 31, 2010 01:37 AM #32
Ambassador
1,392,964
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

It is not always true, what neighbors will tell a buyer. But sometimes they know MORE than the current seller, too! Especially if they have lived there "forever".

 

May 31, 2010 02:27 AM #33
Rainmaker
134,127
Nogui Aramburo
Linda Craft & Team, REALTORS® - Raleigh, NC
Real Estate Professional in the Raleigh Area

Keep any receipts of work done!

May 31, 2010 06:42 AM #34
Rainmaker
208,697
Kristen Correa, Broker
Kristen Correa Real Estate - Keller, TX
I love coffee & real estate. I am out of coffee!

Great blog. I was appalled by comments on a recent post of mine whereby I recommended a pre-inspection as one of many means of preparing homes to put on the market and received comments back like: "well, if you inspect, then you have to disclose..." DUH! Better to know now, repair or replace now, disclose problem history and resolution now, show work performed and warranties offered now, and let a buyer buy knowing all this now, than the alternative above! Seems like a no brainer to me. And to buyers: eliminating based on nosy neighbors = not wise. Take their words into consideration, perform your inspection and seek pro opinions, but neighbors are not the gospel.

May 31, 2010 03:18 PM #35
Rainmaker
194,583
Antonio & Alexia Cardenas
Alameda County - San Leandro, CA. - San Leandro, CA
"The Realtors In Motion"

Jason, you are right, sometimes the restrictions on the HOA documents contradict what the new buyer wants to do in the property.

Wendy, is the same in life, be truthful, honest, and treat everybody the same way you would like to be treated. Put yourself in the shoes of the buyer, would you like to be surprised with something nasty or unpleasant about the house?

Erica, I agree with you, sometimes the neigbors are a good source of information about the area, good and bad, sometimes I ask the buyers to go check with some neigbors about that.

Richard. Over disclosing can actually backfire too. I prefer to have those inspections done before and offer them to the buyer as disclosures.

Nogui, and of course, all that is good if you put it in paper, but making sure the buyers signs and dates those documents is equally as important.

Kristen, I am with you about inspections, I even volunteer to pay for those inspections and ask them to reimburse me later in escrow. I want everything on the table before the offer is accepted. Professional Inspections act as the best ally in disclosing all about the house. Their cost is peanuts compared to a law suit. 

Antonio

May 31, 2010 03:21 PM #36
Rainmaker
1,220,376
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

Excellent points.

Jun 01, 2010 02:48 AM #37
Rainmaker
543,525
Eric Michael
Remerica Integrity, Realtors®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

Great post. Shows how serious things can be. I think that most sellers think that if they just don't mention something, that it'll never be found out.  That might be the case, but you never know about those neighbors.

 

Jun 01, 2010 09:36 AM #38
Ambassador
555,268
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

Antonio...

I have a great story that ties into this post. Several years ago BB and I did an lease option on a property we were not sure we wanted to buy. The Seller's had the contract reviewed by an Attorney. They also filled out a Seller's disclosure for us. When we moved in to the house, we discovered the house had a shit Ka Ka (smile) load of undisclosed material defects throughout the house. When it came time to for us to close, there were several problems. 1. The house had lost $100,000 in value (market crash) 2. Repairs for the house were going to run us, about $15,000. We went back and forth with the Seller's trying to help them understand there's no way we'd be able to get a mortgage at the original contract price. It would never appraise. When they heard that, things went south, quickly. We told them we were sorry the market crashed but we couldn't close without negotiating the original contract. At that point, they said they were going to sue us. Our response was, well, that's all well and good and we understand how'd you'd feel that way, but, no more threats, please seek the advice of your Attorney before moving forward, and please remember, you failed to disclose all those material facts about your house. Never heard from them again Antonio. The house, well, it went into the Short Sale market. And to see that happen was a shame. We'd have purchased that house, if only they willing to wrap their heads around reality and the importance of disclosure. One thing that still really bothers me is that the Seller's had redone the floors throughout the house with laminated wood. While living there, one of the neighbors disclosed to me that Seller's had taken the flooring from the end of her driveway. It was defective flooring that was on the curb waiting to be picked up by the company who sold the neighbor the flooring. The defective flooring contributed to my breaking my femur bone. Snapped it right in half. Did I try to sue the Sellers, of course not. They had enough on their plate. Would a judge have awarded me pain and suffering? You bet. The Seller's never said a word that the flooring in their was actually garbage :)

Whew...I should have turned this into a post. Nah. You can the chewable comment :)

P.S. Can I nickname you "reMotion"? lol.

TLW...ROAR!

Jul 02, 2010 01:27 AM #39
Ambassador
555,268
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

Whoa...

That's a loooooooooooooong comment. Feel free to delete it Antonio. Let's call that an "escape clause" :)

TLW...ROAR!

Jul 02, 2010 01:29 AM #40
Rainmaker
194,583
Antonio & Alexia Cardenas
Alameda County - San Leandro, CA. - San Leandro, CA
"The Realtors In Motion"

No my dearest friend. My delete button only works for spammers and mean people. I like your story, and it relates to the blog post. Even the part about the neighbors telling on the previous owners.

I do believe that each Realtor should be sued once in their Realtor lifetime. Getting sued is not fun at all, and if the sellers is nonchalant about their disclosures, they will turn on you and tell the judge that they did not know and... YOU, their Realtor did not tell them!

I am very sorry that the non disclosure of the floors caused you to have an accident that affected you so much. THAT IS THE ESSENCE OF DISCLOSURES! If people do not know, it could really hurt them! Thanks for you visit TLW, I appreciate that, and yes! you can call me reMotion... that will work for me!

Antonio

Jul 06, 2010 04:21 PM #41
Anonymous
Diane

We made an offer on a home listed as a "Raised Rancher" which was accepted. We then gave the realtor a check ($1000.00) to hold the home. 3 days later we had a licensed home inspector come & found out the home was a modular home NOT a rancher which is what we wanted. Can we sue to get our $1000.00 check back due to this misrepresentation of the home listing?

Oct 01, 2014 02:10 AM #42
Anonymous
Honest Seller

What if the Real Estate Broker changes the disclosures without your knowledge (as a seller), are you liable for their misconduct? And if yes, this hardly seems right, what can a seller do? After all, you (as a seller) disclose defects and someone else takes your disclosures and puts in frudluent ones without your knowledge... What is a seller suppose to do?

Nov 24, 2015 04:18 PM #43
Anonymous
Antonio & Alexia Cardenas

One very important factor here is to always get copies of what you give to the buyers, or even the agent, you must keep a copy for your records. Get a copy of what you signed, that way you will have the original documents and can prove that is what you wrote, any changes to the document must be acknowledged by all parties. The Realtor should never write anything on those documents! If he/she did, that is FRAUD... and a bunch of other bad words. Thank you for your visit.

Nov 24, 2015 11:51 PM #44
Anonymous
Stefanie

I sold a home in Alpharetta in Dec 2013. We went binding October 10, 2013, and amended October 24, 2013. The real estate agent was best friends of the buyer...but "representing me"....In December of 2015 I received a letter DEMANDING 28k for "repairs and work" that they had done on the yard claiming that I lied on the disclosure when I answered "no" to if I was aware of standing water for more than one day in the yard. We NEVER had a problem with water in the home, OR the yard....These people have already taken out every tree, bush, etc...they've cosmetically changed the color of the home and bushes around the home, etc....I have affidavits being signed by neighbors saying that I didn't stand around and talk about water in my yard, etc....I had an inspection on the home before I even listed...the inspector came back out and gave me a double thumbs up after I had fixed some of the smaller items....and then the buyers also had an inspection during their 14 day due diligence....Keep in mind....these were best friends of my agent....They were allowed generous access to the home from Oct to Dec 30 2013 when we closed. We got about 10 in of rain in December of that year...not once did they stop by to check to see the yard...they did bring people thru and take measurements however. Let me add, the home was paid for. I was under no pressing financial need to sell right at that moment....As a matter of fact, I thought I could've gotten more for the home....There was never an "Under Contract" sign put on the For Sale sign....and the home wasn't shown during that almost 3 mo period. Long story short....I have SEVERAL people wanting to sign affidavits on my behalf, .....My ex husband is even signing on my behalf...we built the home together. We had done a 250k renovation on that home....most of it going to finishing the basement....Had there been a standing water issue or "flooding" issue in the yard, it more than likely would've affected that basement. There was none. How common is this? to get sued for "standing water for more than one day?" What about "BUYER BEWARE?" I'm losing a lot of sleep and money.....But I did nothing wrong. I answered truthfully. Can I hold my agent responsible for some of this? She lives in the neighborhood of the home sold...just a few houses away. She sat with me while I filled out the disclosure as my husband works overseas....Bottom line...What are thoughts, etc on this??

Feb 07, 2016 06:24 AM #45
Rainmaker
194,583
Antonio & Alexia Cardenas
Alameda County - San Leandro, CA. - San Leandro, CA
"The Realtors In Motion"

Dear Stefanie, in my opinion you did what you had to do, you answered truthfully to the direct questions in the disclosures, you order a home inspection, you allowed the buyers to do another home inspection and nobody said anything about drainage problems. Stop asking everybody for affidavits, you have nothing to fear. It is the buyer who has to prove that you lied, and you didn't, I wouldn't lose sleep over at all! Stop asking neighbors and exs to sign affivadits.. You are fine, and no, you cannot hold your agent responsible, because she does not have any input into the disclosures and if she suggested you AND the buyer have their own home inspections, then she did the right thing, and so did you!  You are fine.

Feb 07, 2016 07:16 AM #46
Anonymous
Stefanie

I appreciate your response! Actually, my lawyer wanted affidavits signed b/c their lawyer stated that "all of the neighbors said that I spoke to all of them about the water issues in my yard.".....And actually, my ex husband offered to sign one on his own, (as have most people) and my lawyer said that was a good idea. Thank you again for your response! I will continue to take deep breaths and hope that this whole thing is shut down soon. :)

Feb 07, 2016 07:58 AM #47
Rainmaker
1,026,681
Sharon Parisi
Keller Williams Dallas Premier Realty - Dallas, TX
Dallas Homes

I hope that all sellers around the country read this post and disclose, disclose, disclose!  Excellent post!

Feb 06, 2017 12:14 PM #48
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