05/23/2014
RESIDENTIAL REAL PROPERTY DISCLOSURES: BUYERS AND SELLERS BEWARE!
Sellers of residential property are required to provide the buyers with a disclosure report pursuant to the Residential Real Estate Disclosure Act (the “Act”). An Illinois case decided in March, 2014, clarified some of the rights and responsibilities for both buyers and sellers related to disclosure reports.
The required disclosure report contains multiple questions related to the condition of the property. In this case, the court reported that the seller allegedly failed to answer some of the questions, including one related to his knowledge of settling of the foundation. Further, he answered “no” to questions about his knowledge of material defects in the plumbing system or the condition of the walls.
Shortly after moving in, the buyers claimed there were major leaks in the basement shower and walls and foul odors coming from the furnace and air conditioner. They also claimed there were several cracks in the basement walls that had been covered with shelving and plaster. The buyers sued the seller for damages to repair the property, claiming that the seller violated the Act by filing a false and incomplete disclosure report.
The seller argued that the buyers waived their right to recovery by accepting an incomplete disclosure form. The court disagreed, stating that the Act requires sellers to complete the disclosure form. Allowing sellers to ignore that requirement would thwart the purpose of the Act, which is to provide a remedy for buyers of residential real property who suffer damages due to non-disclosed material defects in the home purchased.
In this case, the seller had reportedly made an insurance claim for cracks in the basement walls. Further, the court found that when the buyers contacted the seller about the shower leaks and foul odors, he advised them of the source of the problems and made suggestions for fixing them. The court decided that these actions proved that the seller had knowledge of the material defects, and that the buyer’s case against the seller could move forward.
Buyers should insist that the disclosure form required by the Act is completely filled out by the seller, and should obtain an independent inspection of the home prior to purchasing the home. Sellers can avoid future liability by truthfully answering all questions on the disclosure form. Being vigilant in following the early requirements of a real estate transaction may help prevent problems down the road for both parties.
