In 1978, Billy Joel won a Grammy Award for his song “Honesty.” The premise of the song was how dishonest relations between lovers can be. But honesty, integrity and straightforwardness of conduct are key elements in a real estate transaction, which essentially is a relationship between people.
It’s been a long time since I wrote about property disclosures when purchasing primarily residential property, so it’s probably time for a few reminders.
In real estate purchases, the buyer needs to be aware of potential problems with the property and employ the proper inspectors to inspect and verify the home is free of major defects. Helping buyers in this area are Florida state laws that require sellers to disclose defects before the property closes. Since 1985, Florida law has provided that with some exceptions, the seller must disclose any facts or conditions about the property that may have a substantial impact on the value or desirability of the property that may not be visibly obvious.
The Florida Association of Realtors provides a standard form that covers many common property characteristics about which buyers want to know. Some of these items are potential claims or court proceedings; nature of condominium or HOA associations rules; boundary issues; status of any sinkholes; any environmental hazards such as asbestos, lead paint, mold, Chinese drywall; damage from wood destroying organisms; flooding or ground leaks; disclosure of the condition of major systems such as central air and heat, plumbing and electrical systems and brands and condition of appliances.
Although sellers are not required to complete and sign this form, they are still required to disclose all relevant information to buyers even when it may not be obvious. The disclosure of hidden problems is, of course, the most important information, and I would be careful if a seller refuses to put in writing the property disclosure information.
Sellers do have some protection regarding disclosure; they are not required to disclose those property defects of which they have no actual knowledge. If buyers discover a material problem after closing, the onus is on them to prove the seller knew about the defect and did not disclose it, as well as justify that the defect has had a substantial impact on the value of the property.
In addition, homeowners do not need to disclose to buyers if the property has been inhabited by a person infected with HIV or AIDS or that a murder or suicide has occurred or is suspected to have occurred on the property. I would add that reports of a property being “haunted” also do not have to be disclosed.
A word of caution: Homeowners may think that if they are selling the property in an “as is” condition, that absolves them from the requirement of full disclosure. This is not the case and sellers will have to disclose any material defects even if the property is listed as “as is” condition.
The lesson here is that buyers need to do their due diligence to uncover any hidden problems in a property. Sellers must adhere to the principles of honesty in making any pertinent disclosures to buyers and instill confidence in the buyers.
Billy may have had it right in 1978 when he wrote “everyone is so untrue.” But I prefer to believe that most people are basically honest and transparent; hopefully, I’m not wrong.
