When you put your home on the market, you want it to sell fast and for the best possible price. However, pursuit of that goal leads some sellers to believe that telling potential buyers what's "wrong" with the home may jeopardize the sale. If you're planning to sell your home, realize that nondisclosure of an issue like secondhand smoke can lead to a lawsuit for fraud or for breach of your state's real estate disclosure statute.
An incident in Massachusetts shows how disclosures and nondisclosures concerning secondhand smoke can affect a real estate deal.
Legal Obligation to Disclose Secondhand 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 secondhand 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 secondhand 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, based on the fact that it didn't "fix" the problem with the smoke.
Note that she couldn't have sued the seller for failure to comply with a state disclosure statute, because Massachusetts doesn't have one; it's what's known as a caveat emptor or "buyer beware" state.
Burrage eventually settled with everyone but DeAngelo. The jury must have believed D'Angelo's story that he never said anything to Burrage about the smell of smoke in the condo and that the two never discussed the matter when they visited the condo on several occasions, because it refused to award Burrage any of the $70,000 in damages she sued for.
No matter what your state's laws on real estate disclosure require, or the fact that neither the seller nor the real estate agent in this case was ultimately held liable, it illustrates two things:
- Buyers get angry when they feel they've been lied to over the condition of the property, and
- When lied to, buyers may sue, leading whoever is defending against the suit to spend time and money on lawyer's fees regardless of the outcome.
As a home seller, you can avoid such difficulties by simply disclosing what you know about the condition of the home or property.
State Laws on Home Seller Disclosures
Most U.S. states have laws requiring home sellers to disclose problems or defects concerning the property. These states typically have a standard disclosure form for sellers to use, with language either set by law or developed by the state's association of Realtors. You can probably get the standard form from your real estate broker or online.
What types of defects a home seller must disclose to potential buyers varies from state to state. The typical rule, though, is you have to disclose any "material" or "serious" defects or problems, that is, problems that would have a measurable impact on the property's value or affect buyers' interest in it. You also must normally disclose only those problems that you know about; no need to hire inspectors to turn up issues that you had no idea about.
So, you don't necessarily have to disclose every single minor problem, such as creaky floors, doors that stick, and small cracks in the walls. Some examples of things you may see on a disclosure form include:
- flooding or leakage in the basement, roof, or around windows
- cracks in the foundation
- presence of pests, termites, rodents, or dry rot
- poor electrical wiring
- mechanical problems with heating, air conditioning, water heater, and any appliances being sold with the home
- presence of hazardous materials on the property, such as radon gas and asbestos
- lead paint anywhere in the house (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 plain, and
- any other material problems that the form didn't ask about.
Secondhand smoke is rarely found on the list; but an "other" clause often is, in which case you would need to mention it. Besides, even if your state's law doesn't require seller disclosures, the buyers may request it. And even if you don't feel legally bound to disclose an issue like secondhand smoke, it's likely a good idea to do so, for the sake of buyer trust and avoiding a later lawsuit.
Also, keep in mind that, in many states, if a real estate broker or agent knows about a serious defect, he or she has to disclose it to buyers even if the seller doesn't.
Questions For Your Attorney
- Is this issue a material enough defect that I should disclose it when selling my home?
- 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?
- 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?