Monday, March 16, 2009

Property Disclosure, Statement of Condition

Buying a house can be a very stressful experience. There are so many unknowns with the quality of the house, not including the bucket loads of money you need to spend. Most locations require that sellers provide buyers with a Property Disclosure Statement, or A Property Condition Disclosure Statement. They are the same thing and basically it is a report card of the property filled out by the seller.

If you are a seller, it is vital that you fill this out correctly. Knowingly forgetting, or misleading can cause serious problems down the road. This is part of your sales pitch, and if it is false, it is a type of misrepresentation. You should also know that false inspections can be used to undervalue your home.

If you are a buyer it is very important to read the statement, and make sure that you understand the key elements that may cause a problem. Also look for soft language, such as "slight, mild, minor, suspected, possible". Those are all words that could be hiding a bigger problem.

But most important. Get a home inspection. If you do not get an inspection and take the disclosure statement at face value, there are two problems.

1. It is hard to prove the problem knowingly existed before you moved in;

2. You have not done your due diligence. In other words the court expects a buyer to take basic steps to protect themselves. Failing to get a home inspection is the single largest problem new home owners have when suing the former owner.

The market has shifted, so it is now much easier for a buyer to take the time and get an inspection prior to signing on the dotted line. Should you put an offer on a house, make sure that it is conditional on the inspection. Also consider other conditions such as subject to your selling your home, financing, and a new one... subject to employment retention.

Contracts for the sale of land are different then other contracts. If you contracted with the small store on the corner you would buy a bag of tomatoes, and you did not, the courts would not force you to buy the bag. They would rule you have to pay the profit margin.

Houses, Land, Art, and Collectibles are different. The courts can try to force the transaction. So if you try to back out of buying a house, and you don't have the conditions in place, you may be in a bit of a pickle.

This is why it is VITAL to get a few conditions on buying the property. Most important is the subject to the inspection.

When picking an inspector it is not suggested you use one from your realty company. Get an independent inspector. In addition walk through with the inspector. Make sure they are earning their money. Ask question. If you have a contracting friend it is always a good idea to have them tag along with the inspector.

I have a friend named Polly. He builds foundations. The city inspector often does not inspect properly. However if Polly is there, the inspector feels they need to "earn their wage" and gives a better effort. The same goes with any service. When their are eyes, there is doubt. People as a rule work better under supervision.

So don't cut the corner and try to save $200 for a home inspection. If you are confident in the value of your home, have your own inspection done. This can be used to counter any inspection that may be fraudulent. It also helps if there is a dispute down the road.

Hire an inspector, follow them through, and read the report. Finally make sure you fill out the Disclosure statement properly, and if you are buying, read it!

If you do have legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.

Copyright © 2009 Peter MacSweeney.
All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

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  1. That's a great posting Peter. I've written a few decisions on latent vs. patent defects, and that's great advice to follow on getting a home inspection.

    I'm told a good, solid home inspection should take around 2-3 hours, minimum.

  2. Many thanks for the kind words Brian. I just talked to a friend last night who wanted to buy a condo, and was told by the owners, "Dont worry Condos are different then houses, you dont need an inspection". Different yes, inspection, still needed.




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