What do I Disclose When Selling Property? - Episode 249
Imagine you've bought a home, likely the largest investment you'll ever make in your lifetime. The house is perfect: enough bedrooms for your kids to have their own space, great kitchen, master bedroom with walk-in closets, a yard outside with space to set up your grill and entertain, etc. You move in and things are great, for a few months.
Then you notice things start to go wrong. Something doesn't work quite right. Something is off.
Then a major component goes bad: the electrical system, the plumbing, the roof, the air conditioning unit, or something else.
Why didn't the seller disclose to you that something was wrong? Now, its going to be thousands of dollars to fix - thousands of dollars that you don't have because you just closed on the house?
What do you do?
Put the shoe on the other foot ... you love your house, but its time to sell and upsize or downsize. Yes, the house has its quirks, but everything works fine. You sign a contract with the buyer, they do their inspections, then you close. You are sad to move, but excited about your new house and happy that the buyers love the house and will take care of it from here on out.
Months later, you get a nasty letter from an attorney, or a call from your Realtor - the buyers are going to sue unless you pay thousands of dollars because you did not disclose some issue with the electrical system, the plumbing, the roof, the air conditioning unit, or something else.
But, you argue, the Buyer did their inspections and you didn't know about the issue that may now form the basis of the lawsuit against you.
What do you do?
In this week's episode of The Crushing Debt Podcast, I discuss the seller's responsibility to disclose and how that is based on the Florida Supreme Court case of Johnson v. Davis, 480 So.2d 625 (1985).
- Did the seller know of the issue?
- Does it materially affect the value of the property?
- Is it readily observable?
- Is it unknown to the buyer?
If all these facts are present, then the Seller must disclose the issue to the Buyer. Of course, if all these issues are present, there's one more factor - is the Buyer collectible?
Remember, my second book, Become Debt Free in Less Than One Hour, is still free at www.ShawnMYesner.com/BecomeDebtFree.