2015 February Best of the Hotline - Seller Disclosure - yet again

By James L. Goldsmith, Esq.

Q. My sellers want to know if they have to disclose that they have had snakes in the house. Do they?

A. This was exactly how the question was posed to me in a recent Hotline call. And the answer, once again, is: IT DEPENDS. On how many occasions did the seller see snakes, or evidence of them? Where did they see them (e.g., the basement, sunroom, porch, living room)? How long ago did they see snakes and how long were the intervals between seeing them? What kind of snakes were seen? As it turns out, the answers I got revealed that the sellers had seen two very small garter snakes slither across the family room floor on two separate occasions over a period of three years.

My answer was that nothing precludes sellers from revealing adverse conditions or sightings, regardless of whether the adversity rises to the level a "material defect." Because there is no bright line that distinguishes a material defect from a benign condition, caution suggests airing on the side of over-disclosure. On the other hand, will you disclose that you get crickets in the home in the fall or stink bugs on occasion? Probably not and I would find that two garter snakes in three years hardly demonstrates a material defect.

A snake disclosure issue was the subject of a law suit filed in central Pennsylvania that was notorious enough to garner newspaper coverage. In that case, the home was infested with black snakes! While black snakes may be beneficial, having a nest of them in the attic is not sought after by most!

A good dose of common sense goes a long way.

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Q. The owner/occupant of the property passed away and her daughter, the executrix of the estate, was charged with selling it. The daughter acquired, by gift, a one-half interest in the property six years previously, but had never lived in the property. Does she have to complete a seller property disclosure statement?

A. Yes. If the daughter was solely the executrix of the estate, she would not be required to complete a disclosure form, nor would she be required to sign the form (despite the fact that the disclosure form has a line for the signature of the executor/executrix). Because the daughter is an owner of the property, she is required to complete a seller property disclosure statement. That a seller has not lived in the property does not exempt her from having to complete a disclosure form (please read this sentence again).

It can be difficult for a non-resident owner to complete a disclosure form. Because the owner is merely required to reveal what they know of the property and because the disclosure does not constitute a warranty of its condition, it should not be a daunting experience. Have the non-resident owner do his or her best in completing the form.

Non-resident owners frequently have much information about the property they didn't live in. Did they pay repair bills, and in the case of an executrix, do they have access to records pertaining to the property's care and condition? Most non-resident owners have more knowledge than they let on at first inquiry.

I generally advise executors and administrators of estates who do not have an ownership interest and who have not lived in the property, to reveal what little they may know. A child might know much about their deceased parents' home despite not having owned or lived in it. Attach a note to the disclosure statement indicating that the disclosure form is being completed to assist the buyers in their evaluation of the property, but that it has been prepared and signed by an estate representative who neither lived in, nor owned the property and therefore should not be relied on. Inspections should be had and due diligence exercised. A similar note can be appended to a disclosure form completed by a non-resident owner.

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Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2014

All Rights Reserved

Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com