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://activerain.com/droplet/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. D B 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
1,363,450
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

Excellent points.

Jun 01, 2010 02:48 AM #37
Rainmaker
543,731
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
556,218
"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
556,218
"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
195,162
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
195,162
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
1,042,145
Sharon Parisi
United Real Estate Dallas - 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
Rainmaker
1,331,706
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Los Angeles CA

Absolutely! The neighbor will:) 

Here, we use C.A.R. forms: Seller Property Questionnaire and TDS for seller to disclosure all material known facts about the property. The explanation should be clear, complete, and coherent. Regardless of disclosures, buyers have to conduct a careful inspection of the property. 

Oct 08, 2017 04:43 PM #49
Anonymous
Daivd

We are under due contract and our Due diligence is up in less than 48 hours now. Our seller has been less than fun to deal with to say the least. Yesterday our realtor and the seller met at the home to go over the inspection report and our fixes we would like done by us or price reduction. on the disclosure statement on items and appliances that are staying with the home (2) dishwashers, countertop stove were listed as n/a on the disclosure statement. Our inspector of course caught these items as being broken or repair needed. The seller freaked out when meeting with our realtor and said I'm not lowering my price anymore I don't care if they are broken or not I'm not fixing them! This home is also on a septic system and we paid for an inspection. The pump has not been working for at least a few months, no power to pump either not working. Seller bought the home in 2014, that was the last known inspection on the septic, Seller never had septic checked or maintained. Now the septic needs almost $10,000 in repairs and it blew the seller away. I know we are pressed for time here, need some ideas and thoughts. Thanks

Oct 24, 2017 06:28 AM #50
Rainmaker
195,162
Antonio & Alexia Cardenas
Alameda County - San Leandro, CA. - San Leandro, CA
"The Realtors In Motion"

Hi David, you did not mention if the seller has his own realtor, that should make a difference if he does. I do not know what state you are in, but here in CA. buyers have 17 days from acceptance do to any and all inspections they deem necessary, right after that, they must remove in writing that CONTINGENCY or condition, it is at this very moment that all the reports are in that you, the buyer, can approach the seller and ask him to do some repairs and/or lower the price. There is not much you can do if the seller refuses to do any repairs, about your only option is to back out of the deal. I would, however, invite you to look at the overall picture and do a complete evaluation of your next step. Did you get a good price for the home? Can you afford to do those repairs after you become the owner? is your local real estate market in the upswing? is it a seller's market? or a buyers market? These are factors that help make a calculated decision. If it is a buyers market, that means you should be able to find a similar home in better condition and the seller will probably have to sit for a while trying to find another buyer. If the market favors the seller, it means sellers will get away with selling the property without doing anything at all, buyers in these cases have no choice, because there is nothing else to buy. A third option would be to find things that you can do, and offer the seller something that says: I will take care of this, this and this... you, the seller in return should take care of this, this and this... sort of giving the seller a compromise agreement that can help him save face. I hope this helps you. Thank you for your visit.

Oct 24, 2017 08:09 AM #51
Anonymous
David

Thanks for the response. I'm in Atlanta, GA. The seller is the acting agent in this transaction, odd but not unordinary. All the reports are in done by us from the inspector, septic tank inspection and a home repair contractor with the prices and paperwork to back our claims. The septic is our biggest concern for in GA if the septic does not pass then this is reported to the County and State which could lead to some bigger issues to the seller if not corrected. Atlanta is completely a buyers market at this point, we are prepared to walk away if necessary. We are counter offering today and instead of $ values we are going to offer in % values instead and see if we can reach an agreement.

Oct 24, 2017 08:14 AM #52
Anonymous
Charlie

Question: A for sale by owner misrepresented, or rather did not disclose to the buyer that the neighborhood turns into a college ghetto every Spring. The buyer is new to town and specifically asked about noise and the owner said that it wasn't that bad and they had no complaints. Seller also told buyer that the house has two apartments but the city doesn't consider the house a two unit rental property but rather a single family residence. Springs rolls around and the neighborhood is loud with parties nearly every night. The owner asks the local Police if there were any previous noise complaints in the neighborhood and they are informed that it is an area with nearly the most complaints. Further digging shows that many of those noise complaints came from the former owner of the house. The new owner decides to rent the house out as a two unit rental property but neighbors tell him that that house can't be used that way. The city gets involved and tells the new owners they can not treat their home as a multi unit rental and angry neighbors threaten a lawsuit if they do. What is the likelihood that the new owners will prevail in court with the former owners?
Could they get their money back as well as the costs associated with closing?

Jan 27, 2018 09:19 AM #53
Anonymous
Charlie

just to clarify after reading my post - seller told the buyer that the house could be rented out as a two unit building, in fact that was a sentence in their real estate ad.

Jan 27, 2018 09:22 AM #54
Rainmaker
195,162
Antonio & Alexia Cardenas
Alameda County - San Leandro, CA. - San Leandro, CA
"The Realtors In Motion"

Hi Charlie, thank you for stopping by. When it comes to For Sale By Owners (FISBOS) all bets are off! simply because the lack of knowledge about disclosures and the risks involved in representing oneself without having the proper training to conduct a safe real estate transaction.

My opinion here is limited because it requires legal advise, for which I am not quialified to provide. It is clear that the buyer did not have the right information and he might have a perfectly legal claim against the seller. Attorneys make winnable cases with a lot less than what you described here. Now the buyer has become the owner and have the knowledge of those issues which means he now has to disclose them to a new purchaser when the time comes to sell the property. His investment is now tainted by these issues and therefore devaluated. Real Estate Disclosures were enacted to prevent exactly these types of consequences for home buyers. Thank you again for your visit to my post.

Jan 27, 2018 10:15 AM #55
Anonymous
Charlie

Thank you for your quick response. I forgot to mention that the seller was previously licensed as a realtor so they certainly should be aware of the necessary disclosures. And other people in the neighborhood, including a broker, cautioned the seller not to deceive a buyer in any way. Thanks again.

Jan 27, 2018 01:54 PM #56
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