When you put your home on the market you want it to sell fast and for the best possible price. Telling potential buyers about what's "wrong" with your home may jeopardize that. A recent incident in Massachusetts shows how disclosures and non-disclosures can affect the deal.

Second-Hand Smoke

In 2006, Alyssa Burrage was in the market to buy a home. She visited a condo with her real estate broker, Joseph DeAngelo. According to Burrage, she noticed the smell of cigarette smoke inside the unit, and when she asked DeAngelo about it, he said it was from a previous owner.

She also claimed DeAngelo told her the smell would go away.

Burrage bought the condo - and the smell, too. It didn't go away. In fact, Burrage discovered second-hand smoke was seeping into her condo from the unit directly below hers. In May of 2008, she rented the condo to a tenant and moved out of the building because the second-hand smoke was aggravating her asthma.

She then filed a lawsuit against DeAngelo claiming he didn't tell her the truth about the smoke. She also sued the downstairs neighbors and the condo association because they didn't "fix" the problem with the smoke. Burrage eventually settled with everyone but DeAngelo.

As for him, the jury must have believed his story that he never said anything to Burrage about the smell of smoke in the condo and that the two never even discussed the matter when they visited the condo on several occasions. The jury refused to award Burrage any of the $70,000 in damages she sued for.

Disclosure Requirements

Many states have laws about disclosing problems when selling your house. Usually these states have a standard disclosure form you can get from a real estate broker, your local library, or online. What a seller must disclose to potential buyers varies from state to state. The general rule, though, is you have to disclose any "material" or "serious" defects or problems you know about.

That doesn't mean you have to disclose every single minor problem, such as creaky floors, doors that stick, and minor cracks in the walls. Rather, if a particular problem would have a major impact on a buyer's decision to buy or not, then you need to disclose it. Some examples of things you may see on a disclosure form include:

  • Flooding in the basement
  • Leaks in the roof
  • Lead paint anywhere in the house. In fact, whether or not your state has a disclosure law, federal law requires you to follow the Lead Disclosure Rule if your home was built before 1978
  • Whether the home is located in a flood plane

Even if your state doesn't require disclosures, it's a good idea to do so anyway. If you know of a problem and you don't disclose it, and if the buyer is later injured because of it, you could have to pay for the damage. You may even go to jail if the buyer is seriously injured or killed.

Also, keep in mind, in most states, if a real estate broker or agent knows about a serious defect, she has to disclose it to buyers - even if the seller doesn't.

In addition to the items listed above, a seller or broker should disclose problems or defects like:

  • Poor electrical wiring
  • Mechanical problems with heating, air conditioning, water heater, and any appliances being sold with the home
  • The presence of hazardous materials on the property, such as radon gas and asbestos
  • The presence of termites or other insects

Protect Yourself

Buyers, sellers, and brokers need to be aware of the laws in their states about disclosures. And, even if full disclosures may hurt the chances of selling the home quickly and for the best price, it's best to err on the side of caution and disclose anything that's serious.

Buyers should take the extra step and have a home inspection done. It may cost a few hundred dollars, but it's money well spent if there are problems that could end up costing thousands of dollars later, or may threaten your safety and the safety of your family.

Questions For Your Attorney

  • Can a home inspector be held liable for a buyer's damages if the inspector doesn't discover a problem or defect in a home?
  • If a seller agrees to repair some defects before I buy the home, can I choose the contractor who does the work?
  • I fixed some problems a buyer found in my home and the buyer signed a sales agreement. Now she says the repairs weren't done properly and wants to get out of the contract. Can she do that?

Tagged as: Real Estate, Residential Real Estate, problems disclosure, real estate lawyer