SOLD AS IS – Disclose or not to disclose

Dated: October 30 2019

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In the past year, there has been more conversation and questions about sellers disclosures and the legal aspect of them. What has to be disclosed – what the sellers' responsibility is and what is the Listing agent/broker’s responsibility is.

As for the Realtor – know we are to do no harm to either party no matter who we have an agency with and must be honest.  If we have knowledge of something we must disclose.  Its pretty simple; cut and dry.

Legally what is the seller’s responsibility – “This is Michigan specific so if you are reading this and from another state check with a Realtor in your area if you have questions”.

The most popular question is if the buyer discovers a defect while in the discovery – inspection period and tells the seller about it- does the seller now have to disclose it to future buyers. The answer is not as clear as you would like ti to be – as my first question would be is this an opinion or fact.

Some home inspections I have seen will throw caution out there but are unclear if there really is a defect. Fact VS Opinion, and yes I have had some inspectors throw caution to only pay for a professional in the field to check it out to find out it is fine and no problems.

IE: Termite damage has been discovered however termites are dormant in the winter so it is unknown if the damage was done years ago or if the termites are active – so what does the seller disclose? Or do they disclose anything? Do they now need to update the sellers' disclosure? Did they have prior knowledge of the termites?

However if given a full report by a professional that clearly states something is broken, non-functional, out of code or dangerous or hazardous (IE: Mold) then yes the seller must disclose to future buyers and must update the seller disclosure.

For instance – never had water in the basement – then a big-time flood comes along and while the house is listed they now have water in the basement – yes new disclosures must be had and even if in a middle of a deal – offer accepted as you have agreed to keep the house in the condition in which it was,  when they put the offer in unless other provisions were agreed upon.

So a few legal facts:

Before selling residential property in Michigan, a seller is required by law to tell the prospective buyer certain things about the property’s physical condition. (This comes from the Michigan Seller Disclosure Act 92 of 1993).) As a seller, you must disclose this information by completing a written disclosure statement and giving it to the buyer. (Mich. Comp. Laws Ann. § 565.951).

If you violate Michigan’s disclosure law, for example, by failing to provide complete written disclosure or intentionally misrepresenting information, the buyer may cancel your purchase agreement prior to the closing. (Mich. Comp. Laws Ann. § 565.954 (3)). Or, if the closing has already occurred, the buyer may pursue legal action against you for fraud on the basis of misrepresentation or omission. (Roberts v. Saffell, 760 N.W.2d 715 (Mich. 2008).)The buyer may also separately sue you for fraud or misrepresentation, without relying on the disclosure laws. (Mich. Comp. Laws Ann. § 565.961).

If you are represented by a real estate agent or broker, the agent is not liable under the disclosure requirements unless acting with you in bad faith. (Mich. Comp. Laws Ann. § 565.965).

So this Realtor's opinion – DISCLOSE DISCLOSE DISCLOSE – in my experience if disclosed – the buyer will have more trust in you. Work through the issues in the beginning then no surprises and you have the best chance of holding the deal together and not wasting time taking the home off the market possibly losing other buyers while the discovery is conducted.  AS for Realtors – it’s your reputation – very hard to save it once it goes bad!

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Michelle Gordon

In 2001, Michelle moved with her family to East Grand Rapids, Michigan from the East Coast. She employed her background in interior design and found that she not only enjoyed the design work but wante....

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