When selling your home, you try your best to present every detail in the best possible light. But in many states, including Ohio, there’s a residential property disclosure form that requires you to reveal significant defects in your house, whether you’ve repaired them or not. Some sellers consider leaving out these details because they don’t want the defects to drive down the price that buyers will pay for the house. Or they simply don’t want to scare aware buyers from making an offer. Choosing to hide known defects in your house can cause you serious financial consequences if you’re caught providing misinformation or neglect to provide known information.
Defects You Need to Disclose
Let’s first discuss what is meant by a “material defect” on a property disclosure form. If there are any issues with a system or component of your property that either poses a risk to people or has a significant adverse effect on the value of the property, then it’s a material defect. Certainly some chipped paint or small scratches in the walls aren’t significant defects, especially if anyone can see them when viewing your home. On the other hand, if you get water in your basement, even only when it rains very hard, that’s something to disclose. Ohio’s property disclosure form contains a laundry list of items that focus on
▪ plumbing and sewage issues;
▪ water intrusion of any kind (in basement, through ceiling or windows, etc.);
▪ heating or air conditioning issues;
▪ foundation issues;
▪ structural defects, including shifting and major cracks;
▪ roof damage;
▪ property drainage problems;
▪ presence of mold, termites, or other pest infestation;
▪ presence of lead paint;
▪ presence of above average levels of radon gas;
▪ problems with legal title to the property; and
▪ boundary issues with a neighboring property.
The state of Ohio requires you to fill out the form with regard to issues that have occurred within the last five years or are currently ongoing. If you’re in doubt about whether something needs to be disclosed, it’s better to disclose it than risk having it come back to haunt you in the form of a lawsuit. If you had a defect and repaired it, that’s something to disclose as well. This shows buyers that you addressed a problem rather than neglected it. You aren’t providing a guarantee or warranty with regard to your repair, you’re simply giving notification. On the other hand, disclosing a defect does not require you to repair it. It simply gives notification that you know of the defect and that you chose not to repair it.
Consequences of Left-Out Information or False Information
While it’s true that certain items you disclose may become points of negotiation on the price of your home, it’s better to be in a position of negotiation than get sued later for being untruthful. There are a number of ways buyers can discover lies about your home, so don’t count on outwitting anyone. Consequences for leaving out information or lying about information could result in a court ordering you to pay for repair of the undisclosed defect, fining you punitive damages, or in extreme cases, making you return the payment for the house and having the house put back in your name.
Disclosure for Inherited or Investment Property
There’s commonly spread misinformation about filling out a disclosure form with regard to inherited property and investment property that a seller has never lived in. It’s true in Ohio that an owner who has never lived in his or her inherited property or investment property is not required to fill out a property disclosure form. However, if such an owner is aware of a material defect, even if they’ve never lived in the home being sold, they are legally required to disclose that information. Being the owner of inherited property or being an investor does not relieve you of obligation to disclose known defects. Filling out the relevant parts of the form is the best way to disclose this knowledge. Again, being caught leaving out known information can result in legal ramifications. Getting caught may be as simple as a buyer finding a local foundation expert who gave you a report of issues and an estimate on foundation repair prior to your putting the home on the market.
How Home Inspections Relate to Disclosure
The question of whether to have a seller’s inspection done on your own home before you sell it is related to property disclosure. Many agents suggest that the seller order their own inspection so that all major home issues are known upfront and can be addressed before becoming points of negotiation with prospective buyers (or at least will be known points of negotiation if a seller chooses not to address them). If this is a path you feel is right for your sale, note that you’ll be required by law to disclose any significant defects that your own inspection reveals. A property disclosure is not meant to serve in any way as a home inspection, however, significant defects revealed in such an inspection are required to be included on the property disclosure form.
If a potential buyer has a home inspection performed on your home and terminates their agreement based on its findings, are you obligated to share newly found material defects with future potential buyers? The law says yes, if you’ve received any information from the buyer’s inspection report. Some agents advise their sellers not to accept or read any part of their buyers’ home inspection reports for the very reason of having to disclose new information that becomes available (whether you agree with it or not). Agents following this path believe it’s best to not know and not have to disclose. This can be a sticky area for sellers and agents to manage as it’s tough to negotiate with a still-interested buyer if you don’t consider the facts that have driven down their offer.
Be Truthful and Accurate
When you fill out the property disclosure form, give honest and accurate responses. Don’t ask your real estate agent to help you on this particular form. Your agent can provide the property disclosure form to you, but he or she hasn’t lived in the property and is not licensed to act as a legal expert. If you have serious concerns about what you must disclose, it’s better to consult a real estate attorney. It’s not only a point of legality to disclose your home’s significant defects, it’s also ethical and the most financially safe decision to make for the long run.