In recent years, more and more millennials are pursuing higher education. This trend has, in many instances, pushed back the age at which we are beginning our careers, starting families, and making big purchases. Thus, NOW is the time that so many of us are looking into buying our first homes. Here is one thing you need to know, whether you are a prospective buyer or seller:
The Residential Property Disclosure Form (required for residential real property transfers in Ohio per R.C. 5302.30) is not just a formality, but rather, is an EXTREMELY important component of the transaction.
At Finney Law Firm, we represent both buyers and sellers in real estate transactions that have, arguably, gone awry. The issue often has to do with a disclosure made (or not made) in the Real Property Disclosure Form. This form requires sellers to answer questions about the condition of the property they are selling. It covers the structural integrity of the home, water intrusion issues, plumbing, etc.
Sellers are required to disclose any problems of which they have knowledge. Even if the property is being sold “as is,” sellers have a duty to not engage in fraud in executing this form (i.e. to not knowingly make any affirmative misrepresentation or conceal a latent material defect in the property). For example, if the seller knows that the basement floods but checks the box marked “No” next to the section for water intrusion, the seller has arguably engaged in fraud, and a damaged buyer could pursue those claims against the seller. It is in the best interest of the seller to disclose all that he knows about the property so as to avoid the risk of future liability.
On the flip side, a buyer has certain obligations as well. If the seller in the aforementioned example had said “ten years ago, there was a flood in the basement, but we caulked some cracks and it is no longer a problem,” the buyer is arguably not entitled to rely on that disclosure in assuming that the problem is fixed and that there are no longer any water intrusion issues. The Ohio Supreme Court has held:
Once alerted to a possible defect, a purchaser may not simply sit back and then raise his lack of expertise when a problem arises. Aware of a possible problem, the buyer has duty to either (1) make further inquiry of the owner, who is under a duty not to engage in fraud, or (2) seek the advice of someone with sufficient knowledge to appraise the defect.
See Tipton v. Nuzum, 84 Ohio App.3d 33, 38, 616 N.E.2d 265 (1992), citing Layman v. Binns, 35 Ohio St. 3d 176, 177, 519 N.E.2d 642 (1988). Therefore, the buyer should then make further inquiry, by hiring an inspector or asking follow-up questions of the seller, or both. To this point, this can be such an exciting time and even the most cautious buyers can easily become anxious to close on and move into their new home, but it is in the best interest of the buyer to ask questions and investigate anything that might become an issue down the road. While the extra time or comparably nominal expense of making such further inquiry can seem frustrating, it could save you tens – if not hundreds – of thousands of dollars in repairs and/or legal fees down the road.
