Being under contract is never dull. But one recent transaction that I was involved with highlighted one of the more concerning aspect of the home purchase process: the reliability of sellers’ disclosures. Below are a few choice items that were missing from these particular sellers required disclosures, but that anyone who has ever read a Nancy Drew or Hardy Boys book could figure out at first sight of these clues:
· When your family brushes their teeth and keeps all other toiletries in and around the kitchen sink, the bathroom plumbing is probably not working properly.
· When termites swarm inside your house in broad daylight, you probably have an active infestation.
· When black mold is growing on your living room wall in plain sight, you might have a mold problem.
I will leave my readers to surmise whether these particular sellers were less than forthcoming on their sales disclosures. My point instead is this: I have very rarely seen a transaction fail because of an issue spelled out in a disclosure. I have however seen many contracts to purchase fail due to the buyers discovery of non-disclosures of known material issues.
A purchase and sales agreement based upon dishonest disclosures is foolish on a seller's part. Particularly in today’s market. Buyers are smart, educated, distrustful and (no offense buyers but you know who you are) oftentimes paranoid about every worst case housing nightmare they read about on the internet. They will find out things about your home that you were never aware of. And they will also find everything that you were aware of. Consider every buyer to be a super sleuth, a glorified Nancy Drew meets “Holmes on Homes.” If a seller is hiding something material, they will find it.
If they find out before the purchase closes, your buyer will most likely cancel the real estate contract because, in the least, they will be concerned that you are hiding something else. And when they do cancel the contract, they will expect you to reimburse them for their costs incurred to find out what you already knew and were legally obligated to communicate in the sales disclosure.
So sellers, take this advice to heart: If there is a material problem with your property that you know about, fix it or disclose it and make sure that your asking price reflects the issue accordingly.
Please avoid the poor choices of the abovementioned sellers. The sellers, who, despite reports and various other forms of plain evidence of the material issues in their home, have yet to modify their disclosures, nor communicate the homes structural and other big ticket issues to interested new buyers.
And as a final reminder to sellers’ agents: real estate licensees in Rhode Island also have a duty to disclose material defects when he or she has actual knowledge that they exist. Don’t let known misrepresentations go unacknowledged – protect yourself and your reputation.