What, if Anything, Must a Home Seller Disclose?

yellow concrete house
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Typically a home seller and his or her real estate agent have no obligation to disclose information about the house being sold.

Nevertheless, it is customary for a seller to provide some facts about the house when listing it on MLS and before signing a purchase and sale agreement.

These disclosures must be made “to the best of the seller’s knowledge.”  This means that, as far as the seller knows, the information being provided is accurate.

Most purchase and sale agreements require the buyer to acknowledge that he or she is not relying exclusively on the seller’s disclosures and that the buyer is responsible for verifying the true condition of the property.

For example, a standard purchase and sale agreement will contain a clause similar to the following:

BUYER ACKNOWLEDGES THAT: (a) INFORMATION WAS SUPPLIED BY THE SELLER AND HAS NOT BEEN CHECKED FOR ACCURACY BY THE BROKER; (b) PUBLIC INFORMATION WAS SUBJECT TO BUYER’S VERIFICATION; (c) EACH ITEM WAS SUBJECT TO DIRECT INQUIRY BY THE BUYER, AND THE BUYER HAS BEEN SO ADVISED; (d) THE BROKER MAKES NO REPRESENTATIONS REGARDING THE CONDITION OF THE PREMISES, STRUCTURE(S) THEREON OR THE MECHANICAL COMPONENTS THEREOF; AND (e) THE BUYER HAS NOT BEEN INFLUENCED TO ENTER INTO THIS AGREEMENT NOR HAS THE BUYER RELIED UPON ANY WARRANTIES OR REPRESENTATIONS NOT SET FORTH OR INCORPORATED IN THIS AGREEMENT OR PREVIOUSLY MADE IN WRITING.

In addition, Massachusetts courts have repeatedly ruled that neither sellers nor their agents can be held liable for failing to disclose information that they had no knowledge of.

There is no liability for failing to disclose what a person does not know…We have never imposed liability for nondisclosure of a fact not known by the person against whom liability is sought.  The notion of disclosure necessarily implies that the fact in question is known to the person expected to disclose it. Underwood v. Risman 414 Mass. 96, 100.

Finally, a seller’s agent has no duty to verify any of the information provided by the seller or to uncover latent issues with the property being sold.

Even the Massachusetts Association of Realtors Code of Ethics and Standards states that their agents “shall not…be obligated to discover latent defects in the property.”  See Article 2 of the Code.

A legal claim against the agent or the seller will exist only if they intentionally mislead the buyer (i.e., committed fraud) or if misrepresentations were negligently made.

In Massachusetts, a negligent misrepresentation occurs when:

  1. the defendant was acting in the course of his business,
  2. the defendant supplied false information for the guidance of others in their business transactions,
  3. the defendant failed to exercise reasonable care or competence in obtaining or communicating the false information,
  4. the false information resulted in pecuniary loss to the plaintiff, and
  5. the plaintiff justifiably relied on the information.

See DeWolfe v. Hingham Ctr., Ltd., 464 Mass. 795, 799-800 (2013).

If you have questions about real estate law, please contact me via email at justin@jrmccarthy.com.

 

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