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Seller Disclosure Laws In Residential Real Estate

Do you remember that leak in the basement three years ago? How about the little termite infestation in the guest room and hallway? Or the third-floor toilet that takes two days to stop running, unless you jiggle the handle just right?
Well, if you do remember, or did anything about those types of defects in your residential property, and now you are getting ready to sell, pursuant to the Michigan Seller Disclosure Act  you must disclose these defects.
Generally, the disclosure act sets forth the conditions that must be disclosed by a seller prior to entering into an agreement to sell with a buyer. In most cases, the burden of disclosure is triggered by whether the issue in question is a material defect. Therefore, minor issues such as peeling paint, landscaping problems, or light switches that don’t activate any lights may not need to be disclosed.
Several of the disclosure acts codify the particular legal form that must be used to comply with the act. For example, Michigan Seller Disclosure Act spells out the form to be used.  The act outlines a number of requisite areas of concern, including information about the roof, structural problems, electrical system, and legal issues affecting title. This act also imposes an ongoing duty on the seller to update any changes to the disclosure form that are found to be inaccurate.
Most acts allow a seller to make a notation of “unknown” or “not available” for categories where the seller has no knowledge. The disclosure acts also do not impose an affirmative duty on the seller to make specific inquiries into each matter listed on the disclosure document. Rather, the disclosures made must not be false, deceptive, or misleading.
The disclosure acts also exempt certain transactions, including those between certain levels of relatives and transfers by an estate representative. They also allow sellers to amend or revise the disclosure prior to closing or another specified time agreed to by the parties.
Real estate agents are sometimes exempted from any liability on behalf of their clients, so long as they do not participate in any deception or hiding of material defects and provide the disclosures in a timely manner pursuant to the disclosure act. With all that in mind, if a seller does fail to comply with an act by hiding a material defect or failing to disclose a past remedy, the act provides general and specific remedies and courses of action.
If you violate Michigan’s disclosure law, for example, by failing to provide a complete written disclosure or intentionally misrepresenting information, the buyer may cancel your purchase agreement prior to the closing.  Or, if the closing has already occurred, the buyer may pursue legal action against you for fraud on the basis of misrepresentation or omission. The buyer may also separately sue you for fraud or misrepresentation, without relying on the disclosure laws. 
To avoid a breach of Michigan’s Seller Disclosure Act follow these best practices:

1. Keep handy the inspection you had performed when you first purchased the home. This will provide you with an early indication of any preexisting defects in the home that you will want to remedy and will need to disclose when you sell.

2. Keep records of any major repairs that you have done to the house. Ignorance is not a defense. For example, if you had the work done and simply forgot to keep the records from the water-damage restoration work you had done in the basement, you can be held liable for failing to disclose.

3. Before you fill out the disclosure form, consult a realtor who will do a walk-through with you in your home. A realtor will provide a neutral eye and may help you recall a defect or repair you forgot.

4. Again, most statutes do not require any affirmative actions for your own inspection prior to filling out the disclosure (i.e., no need to climb into the crawl space that has never been a problem for you while living there). A good buyer will hire an inspector, who may provide information the buyer may use for negotiation on the contingencies in the contract.

5. Most importantly, you should consult your own state’s residential property disclosure act.

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