DISCLOSE, DISCLOSE, DISCLOSE!

When we meet with prospective sellers to go over paperwork, we are often asked what items need to be disclosed to potential buyers. A very good rule of thumb would be "when in doubt, disclose"! Often times, sellers will fix a problem - a leak, a small fire, faulty electric, mold, a "quirky" heating or air conditioning system - and decide they do not need to disclose that there has been a problem. This is actually not a very good idea!

If for any reason a problem re-occurs after closing - and this has actually happened more than a year after taking possession - and the original problem was not disclosed, the seller could still be held liable! In this case, the new owner had water leak into a fairly substantial part of the basement and ruin the new carpeting that had been put in before they purchased. When they called a carpet company to have the carpet looked at and the carpet was taken up, it was obvious that there had been previous water damage to the underlying wood and baseboard! No wonder there had been new carpet put in. Right now, this is in the hands of the attorney - and it is possible that the seller will be liable for a lot more than just fixing the problem!

If the seller had disclosed that there had been a previous water problem in that area, that they had taken steps to have it fixed (sealing an area, re-grading, fixing pipes, whatever), and it has not re-occurred, they would be in the clear - the buyer has been warned of a previous problem.
That did not happen, and this is certainly coming back to haunt them.

Take another example - on the final walkthrough of a home, when the carpets had been taken up, directly under a skylight area there was a large spot of discoloration that was obviously water damage. When the seller was asked about this, he insisted that there was no problem, that the skylights needed to be caulked and he had done that. It was my suggestion at closing that the seller be responsible "at least" for the refinishing of the portion of the floor and that an escrow should be held until the skylights could be examined by a roofer. As all the floors were being refinished, the buyer chose to let it go and not make an issue of it at closing. SO..... the first heavy rain about a month after closing and guess what? Yes, the skylight leaked! The buyer called us immediately to ask what they should do! There had been no disclosure of water leaking, at the settlement table the seller insisted there was no problem. It was my suggestion to have a roofer look at the problem, get an estimate to repair, then speak to the closing attorney about possible recourse. This is currently on-going - I'll let you know what happens!

In any case, this should be a word to the wise - when you are filling out those disclosures, think carefully - disclosing a previous problem that has been fixed isn't going to turn off a buyer - not disclosing could be very costly!

As always - BE INFORMED and CHECK BACK HERE OFTEN!

I have asked on previous posts for questions and/or comments - I know SOMEONE out there is reading this (and I hope it's more than one!), please take a moment and let me know if you have found this helpful, if there is anything you would like discussed, or just say hi - it get's lonely out here in cyberspace :)