I have encountered a situation this week in my real estate practice that is a sobering reminder of the importance of being thorough with sellers disclosures when selling your home. 

Even an innocent omission can wreak havoc on the most seemingly solid sale. You see I represent a seller who is scheduled to close escrow with her buyer in just a few short days. The transaction has been very smooth (once we got past the price negotiations early on). We are 4 days and counting until the close date, when the buyer’s insurance company alerted the buyers to a claim that was filed nearly two years ago by the seller.

The problem is, this claim was not disclosed by the seller on the sellers disclosure form. There is a section on the form in our state that asks if you are aware of ANY claims being filed for property damage in the past 5 years. My seller answered NO. You see, she simply forgot about the incident.

Now we have a situation where the buyers (who are older and have many children "helping" them make decisions on this purchase) have lost complete trust and feel the seller has no credibility at this point. Their minds are working overtime thinking about how many other things the seller may have "forgotten" to tell them. The sale is hanging by a thread. The sad thing is I know these sellers pretty well and don’t for a second think she purposely left out this pertinent information.

However, the buyers don’t know the seller and are now calling into question her integrity. It is really a shame when all of this could have been avoided if the seller would have taken the disclosures more seriously and had taken more time to thoughtfully fill them out. With so much paperwork to muddle through in this business, many people rush through the required forms. But as Joshua Marks, Esq points out at Bigger Pockets, we have to impress on our sellers that the sellers disclosure is the Granddaddy of them all and should never be hurried through. He says;

 

"It is imperative that both the seller and seller’s agent take a
significant amount of time to go through each item on the disclosure
form and provide as complete and accurate a response as possible based
on the information at hand. Generally, a seller will not be held liable
for an error or inaccuracy on the disclosure form, so long as the
seller did not have knowledge of the error or inaccuracy. Further, most
states do not require a seller to spend money to conduct various tests
and investigate the current condition of the property. However, sellers
(and possibly their agents) will be held liable for negligently or
recklessly reporting/failing to report information or perpetrating a fraud by intentionally misrepresenting the condition of the property." 

Don’t let this happen to you! My new policy is to leave the sellers disclosure with them overnight, giving them a stern warning of the importance of thoroughness and then to review it with them upon completion.
I thought that I did a pretty good job of impressing the importance of this 5 page form in the past, but apparently I could have done better. Hopefully we will have a happy ending to this story but for now, it is TO BE CONTINUED.