Most residential real estate sales go smoothly. However, sometimes the closing of the transaction is just the beginning of problems.
The leading cause of post-sale disputes is alleged non-disclosure of defects. No house is perfect, but when a new buyer finds water damage, a cracked foundation or a leaking basement, the first instinct is often to blame the seller.
Any agreement for the sale of real estate must be in writing. The statute of limitations for suits brought on a written contract is 10 years. This means that the seller has a decade of potential liability for failing to disclose material defects when selling property. Thankfully, most disputes can be avoided if proper disclosures are made.
Iowa law requires the seller of real estate to provide a written disclosure statement. This is true even if the seller is selling the property in “as-is” condition or if the seller may not be familiar with the house (such as a sale from an estate).
A seller has an obligation to disclose known material facts about defects. A material fact is anything that could affect the sale price or influence a buyer’s decision to purchase a home. This is a very subjective standard that is weighted in favor of the buyer, so err on the side of full disclosure.
The seller also has an obligation to conduct a reasonable investigation when completing the disclosure statement. In the event of litigation, sellers will be held responsible for defects that they knew about and didn’t disclose or which they should have known about if they had conducted a reasonable investigation. Take the time to inspect the property.
Homebuyers are becoming increasingly concerned about environmental hazards and toxic materials in houses, especially in older homes. Common toxic substances include lead paint, lead pipes, asbestos insulation, asbestos ceilings, formaldehyde insulation and glues, carbon monoxide and radon gases. More buyers are requesting such tests and may expect the seller to correct the problem or offer a lower price to cover the cost of removing toxic substances.
Full disclosure of a home’s history is always the right thing to do. A fact that is material to one buyer may not concern another. If you are wondering whether something should be disclosed, consult your real estate attorney. Ask yourself if you would want to have the information if you were the buyer. If the answer is “yes,” then disclose.
Information provided by Ross Barnett, attorney for Abendroth and Russell Law Firm, 2560 73rd St., Urbandale, 278-0623, www.ARPCLaw.com.