Why It’s Important To Take A Close Look At What You’re Buying
In today’s world of residential real estate, a body of law has evolved that imposes responsibility and liability on the seller of a house. This can include exorbitant attorneys feed and costs if the house has defects, and there is not full disclosure by the seller with ample ability for the buyer to inspect.
Caveat Emptor which is Latin for “Buyer Beware” had been the traditional rule of real estate sale or purchase for centuries. Once a transaction was closed, any defects or repair items in a house was just “tough luck” for a sometimes unsuspecting buyer.
The product liability revolution introduced a doctrine of “Seller’s Duty to Disclose,” which called for sellers to advise buyers about concealed defects that would materially affect the value of the property or presumably hurt someone.
Product Liability Revolution
In the old days, people bought “used” houses the way they would buy “used” cars: what you pay for is what you get and you should be prepared to fix everything yourself. Then, about 25 years ago, when interest rates skyrocketed (15% in 1982), the 30-year mortgage offered by savings and loan associations and then commercial banks and mortgage brokers became the norm for the average working family who needed to make their mortgage payments affordable, replacing the old 15- and 20- year mortgages. The product liability revolution introduced a doctrine of “Seller’s Duty to Disclose,” which called for sellers to advise buyers about concealed defects that would materially affect the value of the property or presumably hurt someone. A classic concealed defect seen regularly in residential closings is the concealing of structural damage caused by live swarmer termites. A seller will have had the termites treated by and exterminator and the treatments holes repaired and painted over. Upon selling, though, he does not disclose the damage within the walls or support beams. The seller could be sued for the cost of repairing the house and also the attorneys fees, court costs, and other incidental damages.
Several years ago, the Florida Bar/Board of Realtors recommended Contract for Sale and Purchase of Residential Real Estate forms that included a Seller’s Disclosure From wherein the seller answers questions on termites and wood-destroying organisms, roof, HVAC, electrical, plumbing, settling sinkhole issues, even about any threatened litigation or neighborhood changes such as highway condemnation. Although not truly part of the contract, this Seller’s Disclosure became very helpful and popular among For Sale By Owners and realtor listed sellers alike because it is the best prevention against a lawsuit when something goes wrong on the house after closing.
The Standard FAR (Florida Association of Realtors) and FAR/BAR (Florida Association of Realtors and Florida Bar) Contract for Sale and Purchase discusses at Paragraph D termites and wood destroying organism conditions and at Paragraph N structural defects, leaks and working systems.
Most residential properties are offered “as is” with right of inspection to be completed no later than usually ten days following the effective date of the contract.
Most realtors and attorneys now recommend that a seller order a home inspection (average price $300) from a competent home inspector when the home is being listed so that the seller can be comfortable that he is disclosing everything and also the seller can quickly make any minor repairs so that the house will show better and the buyer will not be able to negotiate down the price after his inspection period.
Home inspectors will make about a two-hour review of the entire house and a pool if requested and will provide a report with pictures and recommendations. There is no licensure for home inspectors by the State of Florida so the best way to choose a good company is a referral from your attorney, realtor or title company.