While some sellers of residential property feel it is a buyer’s responsibility to find any and all defects with a property, the TN Residential Property Act directs differently. This act requires sellers to “disclose all known material defects – in good faith to the best of the seller’s knowledge as of the disclosure date.” It further states that “sellers must give the buyers the disclosure form before the acceptance of a purchase contract.” The receipt and review of the disclosure, prior to acceptance of a purchase agreement, is a key timeline to keep in mind. In theory, as a buyer evaluates a prospective property and how it will meet their needs, they can also evaluate the condition of the property, including items which may not be readily visible to the untrained eye. Information such as the age of the roof, heating/air systems and water heaters gives a buyer a better understanding of the remaining life expectancy under normal conditions.
Items such as water penetration, storm/structural damage, mold, mildew or flooding are all key items a buyer should expect to know before entering a contract as well.
The Tennessee Association of Realtors and its counterpart, the Georgia Association of Realtors, have prepared copyrighted forms for its members to use as they work with sellers of residential property consisting of one to four units. Once a seller completes these forms, the agent representing them reviews the information conveyed and this becomes the agent’s “knowledge” of the property. Since it is being provided in writing, there should be no misunderstanding or misrepresentation of items of fact. Sellers may give buyers a report or opinion prepared by a professional inspector/expert(s) and even supply information provided by a public agency such as the EPA in lieu of responding to some or all of the questions on these forms.
There are some situations when completion of a residential property disclosure is not required. Properties being transferred as part of a decedent’s estate, trust or conservatorship are a few examples. Also, if a property is being sold at public auction or it is the first sale of a property, a property disclosure is not required. Another common exemption occurs when the seller has not lived in the property at any time within three years of the date of transfer.
If full disclosure does not take place or there are misrepresentations by a seller, remedies are available to the affected buyer under current state laws. An attorney should be consulted in cases where this behavior is suspected.
An experienced member of Greater Chattanooga Association of Realtors can provide a seller with the required disclosure forms at the onset of the listing, providing for full disclosure and a much smoother path to the closing table and beyond.
Mark Hite is president of the Greater Chattanooga Association of Realtors