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Seller's Disclosures

Imagine adopting puppy from an animal shelter who is very afraid of cars.

You adopt the pup, attach his leash to his collar, and set out to put him in your car to bring him to his cozy new home.

All of a sudden he starts yipping, pulling on the leash, sits down on the pavement and pees. You would probably walk right back into the shelter and ask what’s going on?

And they finally disclose to you that he has a horrible fear of cars. If you had known upfront you may have acted differently. You may or may not have adopted the puppy knowing that your life revolves around driving your car.

Or, you would have at least known you would have to walk home with the puppy and slowly try to acclimate him to cars.

It’s similar with a house. If you know your house has a large crack in the foundation, the roof leaks when it rains, or has any other issue, you kinda want to know that up front as a buyer.

Under Oregon law a seller must disclose to the buyer any material defects known to the seller that would not be readily apparent to a buyer. Oregon civil law also imposes on all parties to a contract a duty of good faith and fair dealing.

The law requires that the Sellers delivers to each buyer who makes a written offer to purchase the property a property disclosure statement. The requirement applies whether you are selling a single family home, duplex, triplex, quadplex, condominium unit, timeshare, or manufactured dwelling.

Though Oregon Real estate disclosures don't reveal all. Disclosures differ from state to state.. I had one buyer from California who was shocked to find out in Oregon you are not required to state if someone was murdered or committed suicide or died inside a house. Though our form does ask if the home has ever been used to manufacture illegal drugs..

Sellers don’t have to disclose if a house is suspected to be haunted in our State either, but there is a lot of states that these things have to be disclosed.

If the Seller fails or refuses to provide a property disclosure statement, a buyer has the right to revoke the offer any time prior to closing.

This is really important to understand.. you could be happily be going along with the sale of your home thinking you have a pretty sure deal and never deliver the Sellers Disclosures to you Buyers .. why does that matter?

It Matters cause the Buyers can terminate by simply saying they don’t like the Seller’s Disclosures without giving any other specific reason and get a full refund of their earnest money. A Buyer has 5 business days to review the Disclosures after they receive them and acknowledge them.

To make sure that a buyer does not pull out after a lot of time, energy, and money go towards closing the sale; and to avoid later lawsuits over undisclosed defects; it is important to provide a full and complete disclosure statement and have it signed and acknowledge by all parties involved.

In Oregon, a seller’s property disclosure statement must be in substantially the same form as and use the language provided by the state legislature in the statute, ORS § 105.464. The form takes the guesswork out of what you must disclose.

What this disclosure does for the seller is it lightens their legal liability.. because they have disclosed all the material facts that they are aware of.

Then the buyer can decide if they’re willing to deal with any issues in the house or if they want to walk away completely.

The property disclosure statement requires you to answer specific questions regarding the condition of your property, relating to:

title to the property and existing encumbrances, such as easements and liens

domestic water sources and irrigation

sewage disposal

insulation, including whether there is insulation in the ceiling, walls, and floor

dwelling structure, including whether the roof leaks and whether any unpermitted additions exist

dwelling systems and fixtures, such as the electrical and plumbing components of the house

common interests, like homeowners' association dues and shared common areas.

For most questions, you will be required to answer “Yes”, “No,” “Unknown,” or in some cases "NA" for "not applicable." Each answer must be based on your actual knowledge.

Let’s say the question is: Is the outdoor sprinkler system operable? If the sprinkler system is operable without any leak or other problems, the correct answer is more than likely “Yes.” Alternatively, if you have never used the sprinkler system, or have not used it in several years, the proper answer is likely “Unknown.” If you are uncertain, answering “Unknown” is the best answer.

Such an answer should alert the buyer, if they are concerned, to look further regarding that issue. And if you have no sprinkler system, you would choose "NA."

Consider each answer carefully. If unsure how to answer, ask your real estate agent or attorney.

they cannot answer for you or fill out the statement but they can explain the meaning. No one knows your house as well as you do.

What Is a Material Defect?

The last question in the disclosure statement acts as a “catchall” to make sure all issues that might influence a buyer’s decision to purchase the property are fully disclosed.

Specifically, it asks “Are there any other material defects affecting this property or its value that a prospective buyer should know about?”

For Obvious Defects, Simply Not Knowing Might Not Be Good Enough

Although answers to the questions in the disclosure statement need only be based on your “actual knowledge,”

A buyer might not believe that you didn't know about a particularly obvious defect. If toxic mold is growing under the kitchen sink, smells odd, and is visibly obvious, but you fail to disclose it, a buyer could infer that you knew of the mold, and therefore sue you upon discovering it after the sale.

To avoid a dispute with a disgruntled buyer, it is worth examining your closets, drawers, and other easily accessible areas of the house for obvious defects. This could be especially prudent if you are selling a house that you have not lived in recently (such as a rental).

However, you don’t have an obligation to seek out hidden, unknown defects.

In addition to state-mandated disclosures, for certain older houses, federal law also requires a lead paint disclosure. If your house was built before 1978, you must provide the buyer both a pamphlet titled “Protect Your Family From Lead in Your Home” and a lead paint disclosure.

Fully Disclose All Known Defects

Most buyers have the house professionally inspected. An inspector will do a thorough examination of the house and likely prepare a written report. However, the inspector can’t see water damage through fresh paint, determine whether underground plumbing is leaking, or otherwise find hidden defects. If an inspector misses a defect you knew about and failed to disclose and perhaps even took steps to hide, you are at risk of being sued.

It is critical to be truthful when making disclosures to home buyers. If you fail to disclose a known defect, the buyer may sue you for fraud. Among other potential remedies, a buyer may seek to rescind the transaction or sue for monetary damages. Defending a lawsuit is stressful, can cost tens of thousands of dollars (or more), and take years to resolve.

Being honest about existing defects on the disclosure statement can result in additional negotiations with the buyer. In most cases, disclosed defects can be worked around. If not, at least you will not be sued by the buyer after he or she discovers the defect!

Covering up material defects will likely cost more in the long run.The bottom line is that an honest and complete disclosure is the best way to avoid defending a lawsuit from a disgruntled buyer. If you have questions about the disclosure statement please let us know.

When a seller fails to disclose a material, latent defect, that seller is liable for any costs the purchaser has to pay to remedy the situation. This liability can extend to the listing agent. ... The owner and agent may remain liable even if the buyer's inspector does not discover the defect(s) during inspection.


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