Tell All

“Buyer Beware” is now “Seller Declare” in the world of Real Estate disclosure. The legal duty for disclosure by sellers has evolved to a point just short of a requirement for taking a lie detector test. Sellers now must provide buyers with a completed stack of disclosure forms that rivals the size of a telephone book.

In the old days, sellers could sit back while their buyers crawled over, under, around, and through a property searching for defects. Sellers had no obligation to offer information about the condition of their property, and they usually didn’t. It wasn’t a matter of dishonesty by sellers; it was simply the rules of the road. For buyers there was no map.

Of course, most people are honest, and many sellers did volunteer well-meaning clues such as, “My wife’s uncle built the family room addition. He knows all the codes and the like”; or “That crack in the foundation hasn’t given us any problems since we shored it up with bricks.”

Unfortunately, there were the more devious sellers. Buried tanks, looney neighbors, property line encroachments, and you-name-it, litter the landscape of the old world of non-disclosure.

The landmark case that opened up the new territory of disclosure was in 1984:

The Eastons sued the Strassburgers after the home they bought in Diablo, Ca. sank into the landfill portion of their property which they were not told about. It turns out the Strassburgers had twice filled a 10 foot deep sinkhole on the property.

The Eastons won, and legislators started drafting up new rules of the road. In 1987, it became California Law for sellers to fill out the Real Estate Transfer Disclosure Statement, answering specific questions about the condition of their properties.

We’ve come a long way since then. Sellers are now on the hot seat for an immense array of disclosure requirements. And it’s not always clear what should or shouldn’t be disclosed. (Just how much of a pain in the neck is that neighbor? Is the water at the side of the house during the rainy season a big deal? )

The usual advice is for sellers to err on the side of over-disclosing. It can be a memory-test, but so far, there is no requirement for a lie detector test.