Investor’s never (usually) occupy a home that they decide to sell. In fact, the “home” is an “investment” or a “residential property” instead of a home. Yet, In most states there are required duties, similar to an owner-occupant seller, that an investor selling their residential property must meet. Most investors are uncomfortable with these requirements as they are often items that they may not be aware or informed about. The one that causes the greatest confusion is the Seller Disclosures form.
Since WILMOTH Group is licensed in two states (Indiana and Florida) we will focus on both of those states in this post. Interestingly, the requirements are slightly different in each state. The overall objective remains the same…to provide disclosure to a buyer that a seller has knowledge of a situation with the property that could affect value or their desire to proceed with a purchase.
Indiana Sellers Disclosure
The Residential Real Estate Sales Disclosure is a required form with just a few exceptions (court ordered sales such as foreclosures and estate sales, and transfers in name only between closely related parties). Sellers are required to provide this form no later than the point where there is an accepted purchase agreement.
Just because a seller has not lived in a property does not exempt them from truthfully answering the questions on the form. There is an option for “do not know” and it will often be chosen by the non-occupant owner. Some owners get a little carried away and select “Do Not Know” and then proceed to use some symbol to carry that choice throughout the form. This approach will potentially result in later problems if something is wrong with the home. Why? Because the seller is taking such an inclusive action. They have stated they “do not Know” for questions such as “Is the homeowner a licensed real estate broker” and “Is the property within one mile of an airport.” if the non-occupant owner states “do not know” on an item where there is actual knowledge the seller may be exposing themselves to liability for misrepresentation.
Carefully completing the form, question by question, is the best approach for any seller. In fact, a 2013 Indiana Supreme Court decision clearly creates liability when a seller is proven to not have been truthful in completing the state’s Seller Disclosure Form.
Florida Sellers Disclosure
There is no legal requirement for a seller to give a buyer a written seller property disclosure statement.
However, a seller of a residential property, whether a bank or an individual and regardless of whether the seller occupied the property, is obligated under Florida law to disclose to a buyer all known facts that materially affect the value of the property which are not readily observable and are not known to the buyer. That disclosure requirement exists whether or not the seller occupied the property. The disclosure obligation can be fulfilled via either a verbal or written disclosure. Most residential properties represented by a brokerage utilize the written disclosure statement.
Interesting differences between the states. The common thread here is that a seller, whether or not they ever occupied a home, has a legal duty to disclose to a buyer any known fact that will affect the value of the home. Like it or not. It is not possible to bury your head in the sand and claim you did not live in the home- so you do not know.