Residence: Seller's Duty to Disclosure Material Defect

What is a Failure to Disclose?

A major source of litigation recently has been the failure to disclose a material property defect.  These defects can include foundation cracks, roof leaks and termite infestation.  Additionally, the existence of any environmental hazards, easements and zoning violations must also be disclosed.

What is a Material Defect?

Any fact that may have a significant and reasonable impact on the market value of the property is material. 

What is the Duty of a Seller?

A seller can be liable for damages if he does not make a proper disclosure.  The seller: 

  • Has a duty to disclose any material defects on the property to the buyer
  • Cannot conceal any known material defects from the buyer

What is the Duty of the Buyer?

A seller can only be held liable for failing to disclose if the buyer exercised reasonable diligence when inspecting the condition of the residence.  This can include the hiring of a contractor to inspect the premises. 

A buyer cannot later sue for material defects that he should have identified during a preliminary inspection or he knew about before the completion of the sales transaction

What is the Duty of a Broker?

Like the buyer and seller, a broker also has obligations.  A broker: 

  • Must disclose all known material defects to the buyer
  • Must disclose any limitation on the ability of seller to complete the transaction
  • Has no duty to conduct an independent investigation of the property or financial ability of the seller to verify the accuracy of a seller's statements

Tips for Sellers to Prevent a Dispute of Failure to Disclose 

  • Disclose all defects because they may turn out to be material defects
  • Check to see if your state requires a disclosure form
  • Provide written disclosures when possible

What Should I Do if I Have Discovered the Property Has a Material Defect?

Real estate transactions are very complex and laws vary from state to state.  An experienced real estate attorney can help you understand exactly what kind of defects must be disclosed.  A real estate lawyer can also represent you in co

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Duty to Disclose Material Defects of Residential Property

What is the Duty of a Seller?

A seller can be liable for damages if he does not make a proper disclosure.  The seller: 

  • Has a duty to disclose any material defects on the property to the buyer
  • Cannot conceal any known material defects from the buyer

What is a Failure to Disclose?

A major source of litigation recently has been the failure to disclose a material property defect.  These defects can include foundation cracks, roof leaks, mold and termite infestation. The existence of serious environmental hazards, easements violations and zoning violations, un- recorded use of the property by others must also be disclosed.

What is a Material Defect?

Any fact that may have a significant and reasonable impact on the market value of the property is material. 

What is the Duty of the Buyer?

A seller can only be held liable for failing to disclose if the buyer exercised reasonable diligence when inspecting the condition of the residence.  This can include the hiring of a contractor to inspect the premises. 

A buyer cannot later sue for material defects that he should have identified during a preliminary inspection or he knew about before the completion of the sales transaction

What is the Duty of a Broker?

The real estate broker also has obligations.  A broker: 

  • Must disclose all known material defects to the buyer
  • Must disclose any limitation on the ability of seller to complete the transaction
  • Has no duty to conduct an independent investigation of the property or financial ability of the seller to verify the accuracy of a seller's statements

Tips for Sellers to Prevent a Dispute of Failure to Disclose 

  • Disclose all defects because they may turn out to be material defects
  • Check to see if your state requires a disclosure form
  • Provide written disclosures when possible

What Should I Do if I Have Discovered the Property Has a Material Defect?

Real estate transactions are very complex and laws vary from state to state.  An experienced real estate attorney can help you understand exactly what kind of defects must be disclosed. 

 Iowa Disclosure Requirement

The Residential Property Seller Disclosure Statement form is required under Iowa law to be given to a buyer once the buyer tenders an offer to purchase a house. It should be completed by the seller to the best of the seller's knowledge. Both buyer and seller should sign two copies of the form and each should retain a signed copy.
Iowa Code 558A requires that  :

1. Seller must complete this written and respond to all questions, or attach reports allowed by Iowa Code 558A.4(2);

2.Disclose all known conditions materially affecting this property;

3. If an item does not apply to this property, indicate that it is not applicable (N/A);

4. Please provide information in good faith and make a reasonable effort to ascertain the required information. If the required information is unknown or is unavailable following a reasonable effort, use an approximation of the information, or indicate that the information is unknown (UNK). All approximations must be identified as approximations (AP);

5. Additional pages may be attached as needed; 6. Keep a copy of this statement with your other important papers. It is a good idea for seller to keep the disclosure and inspection reports that Seller received when the property was purchased or to obtain an independent inspection of the house by a house inspector.

Lead Paint Disclosure -Disclosure Requirements

With respect to the sale or lease of homes built before 1978, Federal Law requires that the EPA Lead Hazard Disclosure Statement be completed by the seller and signed by the buyer. In conjunction with providing the buyer with the Disclosure Statement, the seller should also provide the buyer with the EPA Lead Hazard Booklet.

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