There’s a myth often circulated by investors, flippers, and rehabbers that they do not have to fill out a property disclosure form if they’ve never lived on the property they are selling. They might actually submit the property disclosure with all blanks except one description with something as follows: “Seller is an investor who has never lived on the property.” Whether they are misinformed or taking advantage of unknowledgeable agents and buyers, an Ohio statute requires them to fill out the property disclosure.
Ohio Revised Code states: An owner of property, in the State of Ohio, that is an improved building or other structure that has one-to-four dwelling units is required to complete and deliver to the buyer a Residential Property Disclosure Form, if they transfer the property by sale, land installment contract, lease with option to purchase, exchange, or lease for a term of 99 years and renewable forever of property. [OHIO REV. CODE ANN. § 5302.30 (2002).]
A seller must disclose in writing any known defects of significance, which are things like current or past flooding, roofing issues, HVAC issues, or structural defects. These must be disclosed regardless of whether the seller ever lived in the property or observed the problem – if the defect is known, it must be disclosed. There are no exemptions for investors, flippers, and rehabbers.
The exemptions that are recognized in the stature include property transferred in estate sales among family members. But even these sellers have a duty to report any “known latent defects or material facts” to the buyer.
How Do I Protect Myself when the Sellers Claim They Do Not Have to Fill Out the Property Disclosure?
1. Verify if they are exempt by asking which of the Ohio statute’s exemptions they fall under.
2. If they are not exempt, ask them to fill out the Property Disclosure form.
3. If the seller is exempt (or simply won’t fill out the form), ask questions such as:
∙ What repairs or modifications have been made since you owned the property?
∙ Were permits obtained for these changes?
∙ Since owning the home, what claims have you made on your home owner’s insurance? What was the result of the claim?
∙ Has your entire property been inspected (including for termites, mold, radon, structural issues, or other)? If yes, please provide a copy of the reports.
Purchasing a home is a large investment. If you are not satisfied with the information you get from the seller, you may want to rethink your decision to purchase that particular home. In addition to information the seller discloses, your decision to purchase should also include your physical walk-through of the home, answers to questions you asked the seller, your own online research, and the results of a professional inspection.