The Importance of Being Honest When Disclosing Material Defects of a Property
Let’s say you have found a buyer for a house you’re selling. You’ve probably gone through the long process of listing the house, holding public viewing events, finding a buyer, and making arrangements for moving your personal property. Additionally, you may feel a little anxious about preparing documents, like the Real Estate Condition Report, because your efforts are finally coming to fruition. Perhaps it seems like those documents are just formalities, and you want to complete the sale quickly. While all of those emotions are valid leading up to the sale of a house or other property, it is important to take those final preparations seriously. Continue reading to understand the importance of being honest when disclosing the material defects of a property.
First, let’s establish what a “defect” is in the context of a house or other piece of real property. The Wisconsin State Legislature defines defect as, “a condition that would have a significant adverse effect on the value of the property; that would significantly impair the health or safety of future occupants of the property; or that if not repaired, removed, or replaced would significantly shorten or adversely affect the expected normal life of the premises.” Wis. Stat. 709.03. This means that if the house you’re selling has a known problem or safety hazard, you are obligated to inform the buyer. Perhaps you know that in the basement of the house you’re selling, water accumulates when it rains. You are obligated to disclose that fact to a buyer because chronic flooding may cause property damage and present adverse health risks over time. If you do not disclose such a defect to the buyer, or you actively take measures to conceal the problem from the buyer, you will open the door to litigation and may be held liable. Reporting defects can become even more complicated when you have not personally occupied the property in some time.
Each house has its own quirks, so it may be difficult for a seller to know what must be disclosed. The Wisconsin State Legislature provides lists of examples for different kinds of potential defects. These lists range from structural and mechanical issues to septic systems and wells. However, it is very important to note that the lists provided by the State Legislature and other lists of examples you may find are only examples. Even if a particular issue is not on one of these lists, it may still be considered a defect. Because these lists are only examples, you may feel like you need guidance on whether a particular issue on your property must be disclosed. Real estate brokers are prohibited by law from giving advice about whether to disclose something that may be a defect. If you do have questions about whether a feature of your property is a defect, an attorney can provide that advice.
Now that you know how important it is to be honest when reporting the defects of a property, you may have questions relating to an upcoming sale or purchase of a house. Contact an attorney at Kelly & Brand, Attorneys at Law, LLC who can provide sound guidance on the buying and selling process of a home.
Wisconsin Statute 709.03 and Lists of Example Defects from the Wisconsin State Legislature: https://docs.legis.wisconsin.gov/statutes/statutes/709/03