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Property Disclosures – What Sellers Need To Know

Form17

Seller Property Disclosure Form

In an earlier post, I discussed the topic of property disclosures, and what it means for buyers.  You can read that post HERE.  If you’re a seller, you may already be familiar with the disclosure form, and may even think that it’s totally unnecessary and a burden to complete.  After all, who reads these things anyway, right? Well, I’m proposing that you look at this document from a completely new perspective.

The Form 17 – A Seller’s Best Friend?

When confronted with a blank Form 17, most of my sellers go numb. It’s a 5 page document with over 100 questions, most of which may not apply to them, or if they do, the questions seem confusing. It’s an eerily similar feeling to completing that health questionnaire at the doctor’s office.

But, the disclosure is a necessity, not just because it is mandated by law, but because it can save you a lot of problems down the road if you take the task seriously and answer ALL the questions to the best of your knowledge and ability.  As my designated broker (boss) always says “Nobody has ever been sued for disclosing too much!”  I’m not sure I believe that, given the plethora of frivolous lawsuits I hear about, but his point is well taken.  In reality, filling out the form correctly and honestly will never prevent unhappy buyers from starting a lawsuit, but sellers should consider the disclosure as a form of insurance.  By disclosing a condition, the seller shifts the burden of investigation to the buyer.  By remaining silent, a seller risks the appearance of concealment and a lawsuit.

Caveat Emptor?

As the Latin phrase explains, ‘Let The Buyer Beware’. This doctrine generally means that buyers have no recourse of action unless a seller makes material misrepresentations amounting to fraud.  In real estate, a buyer only has to prove that a seller had actual knowledge of a hidden defect and failed to disclose it.  The buyer does not have to prove a seller’s intent to deceive or hide the defect.  Once a seller discloses an actual or possible defect, the duty shifts to the buyer to exercise diligence and investigate.

“But What If I Don’t Know?”

This is a common question when it comes to filling out the form. That’s why there are three (3) possible answers to the questions:

  • YES
  • NO
  • DON’T KNOW

As an agent, I cannot help a seller fill out the form, so I advise them in the following way:

“If you know the answer to the question is YES, then you should answer YES. If you know the answer to be NO, then you should answer NO. If you are unsure of the question or the answer to the questions, you should answer DON’T KNOW.” I also follow up my advice with a recommendation that they seek the advice of an attorney for any legal matters.  In my experience, the DON’T KNOW box gets checked more than any other on the form…

6 Good Reasons To Fill It Out.

  1. The law requires it
  2. It puts the burden of due diligence back onto the buyer
  3. It helps jog your memory about things that should be addressed prior to putting your home on the market (i.e. fix it now so you don’t have to disclose a problem)
  4. It may help prevent misunderstandings and a lawsuit later down the road
  5. It gives you a reason to talk to your spouse
  6. The law requires it!

What are your thoughts about the property disclosure form? Do you think there are too many or too few questions? How would you change it? Leave me a comment with your suggestions…

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