Don't Buy A Home Without Seeing This First!
If you plan to buy a home now or in the next few months, let me tell you about a critical document that you absolutely must get from the seller before you start spending any money on inspections or repairs.
In the old days, the rule of law for homebuyers was “Caveat Emptor” (or BUYER BEWARE). But in Florida, that was changed back in 1985. The new rule is “Emptor Praeparate”
The document that I’m addressing is the SELLER’S PROPERTY DISCLOSURE, and you should not just hope that the seller will include it in the contract documents. Instead, demand to see this document with a signature and current date from the seller on the day the contract is executed.
There are several reasons why this is important, and above all is the fact that it could save you both heartache and money during both the purchase and ownership of your new home.
What Are Home Sellers Required To Disclose?
In 1985, the Florida Supreme Court announced a new rule of law to replace the long-standing rule of "caveat emptor" (or buyer beware!), when dealing with residential transactions. Unlike commercial transactions where there is no disclosure requirement, homeowners must disclose all known facts that might materially and/or adversely affect its value.
This means that anything that the seller knows (or should know) must be shared with the buyer before the buyer closes on the home. The disclosure requirement includes obvious things like the condition of the property, but it also includes less obvious issues such as changes in the neighborhood or assessment increases.
Anything that the seller knows, or should know about the value of the home must be disclosed to the buyer.
With this disclosure requirement in mind, how should a buyer use this knowledge when buying a home in Florida?
Make The Seller's Disclosure A Part Of The Contract
The buyer should review the Seller's Property Disclosure before writing an offer. Pay close attention to the date of the disclosure, as this is a perpetual document that should be updated any time a repair or inspection is performed. The date is important because many sellers have work done on the home when preparing to put it on the market, so often times the majority of repairs on the home have been done recently.
One thing all buyers should ensure is that they get the seller's property disclosure "on the record," in case there are accidental or purposeful omissions that end up causing the buyer harm.
A simple way to ensure a current date on the disclosure is to include it as part of the contract, requiring the seller to sign it with the date of the contract. By doing this, the seller is claiming all known issues about the home as of the date of the contract.
If sellers prepared a disclosure statement when they first listed the home for sale, then that document likely does not include repairs that have been made since. Buyers will want those on the updated and signed seller's property disclosure statement included in the contract.
My Experience With An Unscrupulous Home Seller
The primary reason that a buyer orders a home inspection is to discover potential problems with the property that the seller does not know about. Since the seller has a duty to disclose known issues, we expect the home inspector to find those plus some (hopefully small) issues that were previously unknown.
Nothing will anger you more as a buyer than spending money on a property inspection only to find conditions that were already known but not disclosed by the seller.
This happened to one of our buyers when the property inspector found a towel, cardboard, and some plastic bags that had been rigged to stop a roof leak. But if you looked at the Seller's Property Disclosure that the listing agent provided in the MLS, the "NO" box was checked next to the disclosure question "Has the roof ever leaked during your ownership?" Considering this twelve-year-old home has had no other owners, it does not leave much reason to be optimistic about the owner's integrity.
The lack of disclosure caused a problem for several reasons. First, they obviously knew about the roof leak. Second, we were the second contract on the home, meaning a previous home inspector had found the same issue.
Anything a home inspector finds wrong with the home should be added to the Seller's Property Disclosure, so in essence, this was evidence of not only the seller hiding the issue but also the seller's agent being a party to the deception, as she had seen a copy of the previous inspection report.
Needless to say, our buyer had no faith in the seller and terminated the contract. We also encouraged the seller to pay for our buyer's home inspection in order to avoid litigation (the seller did so).
Why The Seller's Disclosure Statement Is So Important To Buyers
It's been my experience that most home sellers do not have a clear understanding of this requirement to disclose. By making the disclosure a part of the contract, it increases their awareness of its importance.
Buyers need this document prior to or during the "free look" period of the contract because it allows them to walk away or renegotiate if they learn of something important that they did not know about the property.
When this form is used correctly, it is anti-climatic. and everything goes along just fine. It is when the seller omits or forgets something that should be on the Sellers Property Disclosure Statement that causes so many of the problems during the home selling process. And this is why it's important.
While I'm not giving legal advice, I suspect a signed Seller's Property Disclosure showing omissions on the part of the seller would be handy for the buyer if legal action were pursued after the sale.
When it comes time to buy your home, ensure that you look at a seller's property disclosure for any property that you plan on pursuing. It should give you a fairly good idea of the property's condition, as well as a warning for anything that might be impeding the property's appreciation in the near future.
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