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Property Disclosures – What Buyers Need To Know

Form 17

Since 1995, sellers in Washington State have been required by law to provide to potential purchasers a document titled “Seller Disclosure Statement”. This disclosure comes in a few different forms, depending on whether you are purchasing an “Improved” property (home, condo, etc.), “Unimproved” property (generally raw land), or “Commerical” property.  Whichever type of property you are purchasing, the purpose of the disclosure is the same. It is provided so that you, the buyer, have information about the property that you may not have known otherwise unless you were the seller.

Why Do I Need One?

Emotions can sometimes override our logical thought processes when purchasing a home.  Have you ever fallen in love with a home despite obvious issues that were present from the start? Then after you move into the home, those rose colored glasses come off and you see all of the flaws? Who do you blame? The agent? (I hope not). Probably the seller, right?  Oftentimes, when in an emotional state, we see and hear what we want to see and hear, not necessarily what was seen and said.

The Attorneys Save The Day

Rather than go through the “He said / He said” ordeal if problem arose, the state legislators decided that it would be better for all parties if the seller just filled out a disclosure statement and gave it to the buyer up front. This disclosure (nicknamed “Form 17” ) asks sellers probing questions such as “Has your roof ever leaked?” and “Has there been any settling or slippage…”. In reality, there are over 100 questions on the multi-page document.  All designed to inform you, the buyer.

Caveat Emptor

A Latin phrase for “Let The Buyer Beware”. It usually refers to the fact that once you buy something, it is yours, regardless of the condition or problems. In general, you have no recourse of action, unless you can prove fraud on the part of the seller.  Most buyers expect far more disclosure from the seller than the law requires.  Interestingly enough, sellers have no duty to inspect their property or look for defects and may not even consider a condition a defect after living with it for years.

Instead, sellers have a limited duty to disclose material defects that substantially affect the physical condition of, or title to the property and information that substantially adversely affects the value of the property.

Additionally, sellers typically have no duty to disclose neighborhood conditions or past events at the property. For instance, sellers usually have no legal duty to disclose the following conditions either at the property or in the neighborhood

  • Murders, suicides, rapes or other crimes
  • Ongoing criminal or gang activity in the neighborhood
  • Registered sex offender in the neighborhood
  • Future development in the area
  • Political or religious activities in the area

If any of the above matters are concerns to a potential buyer, then the buyer must include an inspection and “Neighborhood Review” contingency in any agreement and follow through with the inspection.

“Does This Mean I Don’t Need An Inspection?”

Absolutely Not! Washington law imposes a duty of diligence on the buyer to fully investigate the property and any information provided by the seller.  This means that you can’t just pocket the inspection and go about your business as usual.  The buyer is charged with the knowledge that the buyer would have obtained with a diligent investigation.  For example, a buyer who receives an inspection report identifying a possible defect has a duty to investigate further and may be barred from seeking compensation from the seller later if the defect could have been discovered through further investigation.  

“Where Is My Disclosure?”

“Hey, I just bought a bank owned home and didn’t get one of those disclosures. Why Not?”  All sellers are required to provide a completed disclosure document to potential purchasers except in certain situations.  Some of the exceptions include (but are not limited to) foreclosures or deed-in-lieu of foreclosure, a transfer between spouses, bankruptcy and more… For a complete list of exceptions, click HERE.

The Bottom Line

Be your own advocate.  Take the seller’s information with a grain of salt and take responsibility for your own actions by performing your own investigations and inspections. Of course it also helps to have an experienced agent working with you…

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