No seller disclosure? A home buyer is worried about investing in a home where the seller refuses to provide a seller disclosure form. What are the liabilities?
Q: We are first time home buyers and we liked a house which is 20 years old and looks to be in good condition except for kitchen appliance, second floor carpet, painting, bathroom fixtures.
The seller is not providing a seller disclosure form and is selling property as is, although allowing for home inspection. He says he won’t do any cosmetic or aesthetic fixes after the home inspection.
We have accounted for carpet change, appliances, fixtures and painting cost in our budget but we don’t know about HVAC, roof, plumbing, electrical, duct work and roofing. We don’t want them to be near end of life and we have to put another $40,000 to $50,000 in the next two years.
How we can cover ourselves in the contract? Should we even go ahead with no seller disclosure as we have read that this is usually for houses in disrepair/foreclosure? This house doesn’t look bad. It’s just 20-year old house so we wonder what seller is hiding with no disclosures.
A: Some states require just about all sellers to provide a seller disclosure form to a buyer, but in some cases a seller is not required to deliver the disclosure. For example, if the seller’s home is part of an estate or a foreclosure sale by a sheriff or court, a seller disclosure form may not be required. The rules are governed on a state level.
Some states will give the buyer the right to terminate the deal if they do not receive a seller disclosure form and before the closing the buyer finds something that should have been disclosed to the buyer by the seller.
But, once you close without a seller disclosure, you might not have the right to sue the seller for the failure to disclose items that should have been disclosed to you.
You haven’t told us if the seller is the representative of an estate that is selling the property or if there are other circumstances that are unique to your seller. So for the purposes of this column, we’ll assume that the seller has the obligation to give you a disclosure but isn’t providing it.
If he has the obligation to disclose, but doesn’t, and you find something wrong with the house, the state statute might give you the right to get reimbursed for out of pocket expenses or other fees you incurred if you canceled the deal. These might include the cost of a radon inspection, for example, if that comes up as a key issue.
But that’s not how all states operate. In other states, if a buyer closes without getting a seller disclosure, the buyer won’t get the protections that would be afforded the buyer under the seller disclosure laws.
So if you decide to close on the property, and after the sale you find something wrong with the home, you might not have the option of going after your seller for the failure to disclose something that otherwise would have been required to be disclosed to you.
What should you do? If you really love the house and can’t get the seller around to giving you the disclosure, make sure that you have a darned good inspector go through the home with a fine tooth comb. (Having a top-notch professional home inspector is always recommended, but in a case where you don’t get a seller disclosure form, it’s an even better idea.)
Just remember that in this case, you might not be able to go after the seller for a seller disclosure problem. Even so, you should know that if a seller fails to disclose something to you and the seller doesn’t have the resources to pay you for your loss, you might be out of luck anyway. Seller disclosure violations and the possibility of getting attorneys fees if you prevail against a seller only means something if the seller has the means to pay you.
Right? So, if you buy a home from a seller for $200,000 and later find a $100,000 problem with the home and the seller only has $5,000 in the bank and in assets (liquid or otherwise), suing the seller won’t do you much good.
Given all of this, you can decide how to proceed. We’ve seen sellers refuse to give a seller disclosure form and also sell the home AS-IS, WHERE-IS with the understanding that the seller never wants to hear again from the buyer again.
In most situations, you’re going to be fine if you have a good home inspector and a great understanding of what it takes to be homeowner. The real issue comes in when a buyer is unfamiliar with an area or doesn’t understand the risks that may exist in an area. Think of a sinkhole or ground movement that can cause a home’s foundation to be compromised, mold behind the walls, or termites that have destroyed much of the wood behind the walls. These are some of the many issues that can cause thousands upon thousands of dollars to fix or can cause a home to be inhabitable.
So we come back to making sure you have a good inspector that uses the best tools available today to inspect a home, including moisture meters, infrared cameras, and extensive knowledge of construction methods.
Make sure you attend the inspection, with a camera in hand to document the process. Plan to walk through the home with the inspector during the inspection to gauge what the inspector says and where the home inspector finds problems.
Once you have a better idea of the home’s issues, you can decide whether you want to proceed with the home purchase. You should also talk to a real estate attorney and have that attorney help you in the home buying process because this one could get messy.