What do Homeowners Need to Disclose When Selling their Home?

What do homeowners need to disclose when selling their home?  In Georgia, home sellers are not required to complete any type of seller’s disclosure form. There are, however, state-mandated disclosure obligations. Some buyers fail to understand what to expect and what is required to be disclosed by home sellers. Georgia places the burden of researching a home on the buyer; Caveat Emptor or “buyer beware” is the law in Georgia. Many buyers (and unfortunately many agents) are unaware of this and unpleasant surprises can erupt. There are key things for home buyers and sellers in Georgia to keep in mind about seller’s disclosures.

What is a Material Defect in a Home?

Home sellers in Georgia are obligated to disclose known material defects of the home. A “material defect” is an issue that if known to a prospective buyer, would cause that person to not buy the property, or to pay less for it. Obvious things that would be discovered during normal inspections don’t need to be noted. A damaged roof with water stains on the ceiling would be considered easy to find. So would a collapsed deck or roof. However, a damaged foundation behind a finished basement wall would not; nor would termite or water damage in an out of the way place. If the seller is aware of issues like these, they are compelled to disclose that as it’s a material defect.

Sex, Drugs, Murder and Everything Else Not Disclosed

What do homeowners need to disclose when selling their home? Unlike other states, in Georgia, sellers are not required by law to disclose if a crime was ever committed at the home. Drug activity, drug lab, murder, suicide, violent crime or any other unpleasantness is not required to be disclosed. Sellers also aren’t required to disclose if sex offenders or previously incarcerated individuals live nearby (Georgia Official Code Annotated §44-1-16(a)(1) §44-1-16 (b)). Caveat Emptor or “buyer beware” is the law in Georgia, this is reiterated at the top of the Seller’s Disclosure and again on page 3 of the Purchase and Sale Agreement. The duty to discover what matters to each buyer is that buyer’s sole responsibility. This is clearly and obviously stated in the GA purchase and sale agreement.

Sold “As Is” and Without Disclosures

Georgia law doesn’t require homeowners to fill out a seller’s disclosure when selling their home. Sellers have options; a home can be sold “as is” and without disclosure. If the seller hasn’t occupied it (typical with investors) or the seller hasn’t occupied it for some time (transfer, owner rental) it might be listed “as is”. Same for the situation where a seller doesn’t want to deal with inspections and repairs; they can live in it and still sell it “as is”. All that said, sellers are required to disclose any material defects that they are aware of. “As is” doesn’t always imply a hidden disaster, some sellers just do not want to deal with inspections and a second round of negotiations.

What Happens if a Seller Fails to Disclose Problems in a Home?

If it can be shown that a seller willfully failed to disclose material defects or misrepresented the facts, a buyer may have a cause for fraud, misrepresentation, or breach of contract. This then becomes a legal matter and a buyer may be entitled to rescind the contract or may be granted damages. Damages can vary; the seller may be required to compensate the buyer for the diminished value or to pay the costs of repair. Damages can add up quickly as buyers may be forced out of the home for a period of time all on the seller’s tab. Agents are also subject to punishment for withholding information.

The seller’s property disclosure form is part of most traditional purchase contracts in Georgia, it is always best for sellers to answer those questions as honestly and accurately as possible. The amount of information readily available to buyers and third party players like inspectors, appraisers and insurance agents is significant. From permits to insurance claim history to mechanics liens to defective building product settlements, more information can be collected on a home than ever before. The best advice a seller can take is “when in doubt, disclose”.

Buyers have the “due diligence” period to thoroughly research the home. It’s wise to engage professionals and let them work; inspectors, surveyors, radon, termite…whatever the buyer deems important is open for inspection. A buyer curious about the history of a home need only ask the seller. This is best done as a stipulation in the contract; this prevents any miscommunication and both the question and answer become a matter of record. If asked, sellers are legally required to disclose all information honestly. Here’s what the GA RE Commission says about Seller’s disclosures.  Use experts and ask questions.

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