21 Fast Facts about the Seller's Disclosure
1:19 Minute Read.
Imagine what real estate agents had to deal with prior to the Michigan Legislature creating the Seller Disclosure Act in 1993.
Everything was handled verbally.
Buyers had a question about the condition of a property. They passed the question to their agent who passed it to the seller’s agent who passed it to the seller. The seller responded to their agent who responded to the buyer’s agent who responded back to the buyer. It was a system ripe for miscommunication – either intentionally or accidentally.
My advice: “Disclose everything, before the neighbors do it for you.”
In our world today, we don’t think about the Seller's Disclosure much beyond being “another form that must be filled out”. So, let me share a few important facts about it.
Not everyone needs to complete a Seller's Disclosure. Licensed builders selling a newly built home don’t need one. Immediate family members transferring property between themselves don’t need one. Neither do banks selling foreclosed properties or court ordered transfers like bankruptcy need one. Commercial property sales don’t require their use. However, residential home sellers (1 to 4 units) are required to complete a Seller's Disclosure form.
A seller must act in good faith when completing the Seller's Disclosure by being totally honest. They must answer all questions, report known conditions affecting the property and complete the form themselves. If they know of any information provided by public agencies or experts in a particular field, that information must be disclosed too.
It’s inadequate to simply write, “Seller has never lived in house.” They most likely know some information regarding the property even if they’ve never lived in it. They must answer the form completely, even if the true answer is “unknown”.
Also, a seller isn’t liable for errors in the Seller's Disclosure provided they were unaware of any information. If a seller learns something or circumstances affecting the property change, a seller is obligated to correct their disclosure.
And here’s a few important facts for agents: Failure to provide a purchaser with a signed disclosure statement will enable a purchaser to terminate an otherwise binding purchase agreement. And a seller’s agent is not liable for any violation of the Seller Disclosure Act by a seller unless the agent knowingly acts in concert with a seller to violate it. Good to remember.
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