We are coming from a legal, disclosure and real estate position. As either a seller or buyer of a property, it’s to know what needs to be disclosed to cover your best interests. A latent defect is anything in the property that cannot be discovered during a professional and thorough inspection. A patent defect is anything within the property that can be discovered by a general viewing or professional inspection. A seller’s market is when properties for sale are scarce, while there are a large number of buyers. Competing buyers are more likely to take the property as is, we don’t recommend this as it creates more risk. The first 10 days are important as that is your due diligence period (conditional period), a huge component of this is examining the property physically or “otherwise.” “Otherwise” refers to issues that aren’t visible to the naked eye. Regardless of where the market is leaning, always look over the property with a keen eye.
As the seller, here are the general provisions you are bound by:
Any visible defects or something that can be discovered with an inspection does not need to be disclosed by the seller. This is not limited to a stain behind a picture frame, damaged counter tops or cracked windows. This can even include plumbing, as long as the pipes are visible.
If there are any latent defects, the seller must disclose them. If there is an aspect that was not covered, the purchaser has the option of suing after closing.
The seller is legally obligated to respond truthfully or risk legal action. The buyer has the opportunity to insert a clause in the purchase of agreement that the seller states that during their occupancy there has been no illegal drug activity, suicide, murder or natural death.
As the buyer, here are the general provisions you are bound by:
Be proactive during the home inspection process within your due diligence period (conditional period). We would advise utilizing a professional to look for any hidden defects that would dissuade you from purchasing at the selling price.
This can be anything that has the potential to be dangerous, unfit to live in or unfit for the needs of the buyer. If this is not brought to the attention of the buyer, they have the potential to sue even after the purchase is finalized, potentially years down the line. This is not limited to hidden water damage, mold, smoke damage or anything that affects the structure of the property. If there is any issue with the property, the seller can take legal action simply stating that the buyer must have known about the issue. We advise that buyers research if there have been any prior insurance claims from the previous owner.
If there has been a history of violence or illegal activity that does not need to be disclosed. The seller does not need to inform the buyer if a murder, suicide or any drug selling has occurred on the property. Most buyers do care about this. It’s on the onus of the purchaser to Google the address and/or ask the neighbors.
The “As Is” clause is when you are willing to purchase the property in it’s current state. No conditions or alterations are required in the sale of the property. This refers to anything within the property. It can be anything from the pool supplies to the pests in the walls.
The “As Is” clause should be generally seen as a warning to potential buyers as they aren’t providing assurance about anything in the property. This is usually done when the property is being sold under the power of sale or an estate sale. Selling under the power of sale is when the buyer is unable to pay off the mortgage and the lender gains the rights of the property. If the home is dangerous, uninhabitable or there are hidden defects this will not protect the seller. The clause can be interpreted. It’s all a matter of perspective as what makes a home uninhabitable to the individual. An estate sale is when everything in the home is sold due to divorce, death, bankruptcy or other legal matters.
We strongly recommend that you build a team experts, which include a realtor, real estate lawyer and home inspector. As a buyer or seller, this is the best way to keep yourself protected. A home inspection is strongly recommended for either side of the transaction. As a seller, you can gauge what needs to be fixed to have the property at it’s pique value. There are a number of things that can go wrong, but if you’re diligent and educated you will be protected.