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What Must a Seller Disclose About Property Defects?

McCarter | East PLLC April 16, 2024

Women on phone complaining about water leakage in kitchenWhen purchasing a new home, excitement can sometimes cloud the need to thoroughly investigate the nitty-gritty components of the property. However, overlooking defects can lead to significant financial and emotional distress. Sellers are required to disclose any known issues with a property, but what exactly must they divulge? What are your rights if they don't?  

Our team at McCarter | East PLLC can help you understand the specifics of property defect disclosure and empower you with the knowledge needed to purchase with confidence or seek legal remedies if defects are later found. We proudly serve clients in Murfreesboro and Woodbury, Tennessee. 

Understanding Common Disclosures 

We often hear about the major issues sellers are obligated to disclose, such as foundational problems, water damage, pest infestations, or hazardous materials like mold. These potential hazards significantly alter the value of a property and must be communicated to a potential buyer. It is important to note that federal law requires a lead paint disclosure for any home built before 1978 due to the serious health risks it poses, particularly to children under six and pregnant women. 

But what other less severe issues must sellers inform you about? While the following is not a comprehensive list, generally, sellers must disclose any known material defects that affect the property's value. For example: 

  • A roof that's older than its average lifespan expectancy 

  • Any damage from natural disasters, such as floods, earthquakes, or tornadoes

Tennessee Disclosure Requirements 

In Tennessee, the rules and regulations surrounding property disclosure requirements are relatively clear. According to Tennessee law, sellers are obligated to reveal certain material defects, such as:

  • HVAC systems not functioning properly 

  • Sewer line defects 

  • Termite infestations and damage 

  • EIFS (Exterior Insulation and Finish Systems) replacements or repairs 

  • Previous flooding or environmental hazards (e.g., sinkholes) 

The Tennessee Residential Property Disclosure Act requires the use of a standardized form that must be completed by the seller and presented to the buyer before closing. If the seller fails to disclose this required information, the buyer may have legal recourse to cancel the contract or seek damages. 

When and How Disclosures Are Made 

The disclosure process typically begins after a seller accepts an offer from a buyer. In Tennessee, the seller must provide the buyer with the disclosure form within ten days of the effective date of the contract. This form is extensive and details various aspects of the property, including environmental, structural, mechanical, and more. Sellers are responsible for answering each question honestly and to the best of their knowledge. 

It is important to note that verbal agreements are not legally binding unless they are included in the written contract or the property disclosure form. Therefore, any information the seller communicates to you, the buyer, that is not in writing should be met with skepticism and investigated further. 

Remedies for Concealed Defects 

The discovery of a concealed defect can be incredibly frustrating, not to mention expensive. But don't despair; there are legal remedies available to you if a seller fails to disclose a material defect. Here are the usual steps you can take: 

Going to Court 

If you believe a seller has concealed a defect, you have the right to take them to court. However, this can be a lengthy and costly process, so it's important to weigh the potential financial compensation (award of damages) against legal fees. 

Demand Payment From the Seller 

Before taking the seller to court, you can attempt to resolve the issue directly. Demand payment or compensation for the defect from the seller. If they refuse, then you can escalate the matter to court. 

Contacting HOA, Insurance Companies, or Home Warranty Companies

If the defect is not the result of the seller's actions but rather a condition of the home that should have been disclosed, you may be able to find relief through other channels. Your home insurance company, homeowners' association, or home warranty, if applicable, may provide coverage or assistance depending on the nature of the defect. 

Seller's Perspective on Disclosures

It's important to understand that not all sellers intentionally hide defects. In some cases, they genuinely may not be aware that a problem exists, especially if they haven't lived at the property for long or if the issue is not immediately visible. Sellers should take their time when completing the disclosure form and consider common areas where defects might be lurking. 

For the cautious seller, disclosing all known issues upfront can act as a safeguard against potential legal troubles and help establish trust with the buyer. Transparent disclosures can also facilitate a smoother and quicker sale process and reflect an honest and forthright approach that buyers appreciate. 

The Impact of Inspections

A professional home inspection is a crucial step in the home-buying process, offering an unbiased, expert opinion on the property's condition. An inspection may provide peace of mind or unearth additional issues not disclosed by the seller. In the latter case, buyers can use the inspection report to negotiate repairs or a reduction in the property's price. 

A thorough inspection can also serve as evidence in a legal dispute if a seller concealed a defect that was uncovered during the inspection. 

Reach Out for Skilled Legal Guidance

The maze of property defects and seller disclosures requires diligence and a keen eye for detail. Sellers have a legal obligation to communicate any known defects, while buyers have every right to expect full transparency. By familiarizing yourself with state-specific disclosure requirements, understanding the potential remedies for non-disclosure, and leveraging the power of professional inspections, you can protect yourself from the headaches that come with purchasing a problematic property. 

Remember, honesty is always the best policy, whether you're buying or selling a home. When it comes to real estate transactions, knowledge truly is power. Equip yourself with the right information, be vigilant, and don't hesitate to seek legal advice from McCarter | East PLLC if you find yourself in a situation where a property defect has been concealed. Your home is one of the most significant investments you'll make—ensure it's a sound one.