Transparency is very important in real estate transactions. Sellers must disclose known issues affecting a property’s value or desirability. Failure to do so can cause serious legal consequences. This is where nondisclosure claims come in, and buyers and sellers must understand how they work.
What is a nondisclosure claim?
A nondisclosure claim is an available legal remedy for when a seller fails to inform the buyer about known problems with the property. These issues could include structural damage, pest infestations or legal disputes. If the buyer discovers these problems after the sale, they may have grounds for legal action.
Common issues to disclose
Under California law, sellers of residential properties with one to four units must provide a Real Estate Transfer Disclosure Statement (TDS). This form requires sellers to reveal known facts and details about the property’s condition that might affect a buyer’s purchase decision.
The law also requires real estate agents to conduct a visual inspection of the property. Then, they have a duty to disclose any issues and potential hazards, including:
- Lead-based paint: For homes built before 1978
- Natural hazards: Properties in flood zones, earthquake fault zones or fire hazard areas
- Pest infestations: Any history of termite damage or other pest issues
Failure to disclose these may lead to more than just buyer dissatisfaction.
Consequences of nondisclosure
If a seller or agent fails to disclose all the information about the property, the buyer could sue for damages or cancel the sale. These violations may also result in fines and disciplinary action by the California Department of Real Estate. Therefore, a full and honest disclosure is not just a formality. It is a critical legal obligation in every real estate transaction.
Obligations of sellers and buyers
Sellers should disclose everything and provide all required documentation on time. For their part, buyers should:
- Review all disclosures.
- Hire a qualified home inspector.
- Consult with a real estate attorney if they suspect something important is missing.
Sellers and buyers need to understand the rights and responsibilities involved in real estate transactions. Both parties should consider consulting a real estate attorney. They can explain available legal options. They could also protect their client’s interests. Most of all, they could help prevent costly mistakes during or after the sale.