November 30, 2018
When a Property Disclosure Statement Reveals Negative Information
From time to time we close a sale in which the Property Disclosure Statement—on which sellers are required to reveal any negative information about the property to the specifications of the State—has revealed something that has given the buyers pause. Sometimes this has resulted in a slightly lower purchase price. Sometimes the sellers have managed to fix the problem in the meantime, effectively solving the problem.
Of course, there are also cases in which the Disclosure Statement has resulted in the cancellation of a sale, but those kinds of situations usually don’t make it far enough into the process to reach our office.
Indeed, there are a number of actions a potential buyer can take when a Disclosure Statement reveals something negative about the property of which they were unaware when making their offer.
Order of Operations
The first thing buyers want to do in this situation is ask their realtor to bring up the problem with the seller or, where appropriate, the seller’s real estate agent. This is just as true in Pawtucket, Rhode Island as it is in Boca Raton, Florida, or Cambridge, Massachusetts.
Sometimes the revelation on the Disclosure Statement is about some event in the past—flooding, for example—which the seller is required to reveal, but which in the meantime they have entirely solved by performing thorough repairs that have returned the property to its pre-flooding condition. A simple ask can fill in the more complete story, and make further action on the issue unnecessary.
If the subject of the disclosure is something that remains an issue, that’s when a buyer will want to consider re-negotiating the purchase price lower, to deal with the now-known extra risk being taken on in buying the home.
And, if the problem is just too large to be comfortable with, as mentioned above, a buyer is permitted to back out of the purchase at this point without issue—and with no loss beyond time, since the earnest money deposit is usually returned to buyers in full.
If the transaction makes it beyond the Disclosure Statement and its fallout, then it’s on its way to the closing. Our team at Topouzis & Associates, P.C. stands ready to assist in this final stage of the home purchasing process. We perform searches of title to make sure that the property doesn’t have any legal defects in addition to or despite what may have been found on the physical disclosure form. We also provide Title Insurance, to cover any situation in which hidden issues of title from the property’s past become problematic after closing.