We all know that buying a home involves the reading and signing of many pages of documents. These documents include the Real Estate Purchase Contract, any Addenda, Mortgage documents, Deeds, and Insurance documents. As part of the sale or purchase of real estate in Utah, particularly the sale or purchase of a residence, the Seller is required to provide a document known as the “Seller’s Property Condition Disclosures.”
This is a document that discloses specific issues about a property for sale. Typically, the sellers fill out this form when they put their property on the market. If you’re a buyer and working with a Realtor this is one of the first forms you’ll receive after your offer is accepted. The documents contains a list of specific questions relating to use of the property, the condition of major elements such as the roof, utilities, heating and cooling, appliances, landscaping, termites, additions and remodels, boundaries and easements, structural items and soils, and moisture and mold. Utah has not adopted a specific statute that addresses these disclosures. Rather, the Courts have through a series of cases, including cases heard by the Utah Supreme Court, have adopted a list of items that the Seller is obligated to disclose.
The Utah Courts ruled that it’s up to the seller to tell a buyer “material” defects about a property that a “reasonable prudent buyer” wouldn’t be able to discover on his own. A material defect is defined as something of importance to a buyer that would help determine whether to buy a property or not, or to pay a specified price for the property. The Seller’s Property Condition Disclosure contains the following language: “Seller is obligated under law to disclose to Buyers defects in the property and facts known to Seller that materially and adversely affect the value of the Property that cannot be disclosed by a reasonable inspection by an ordinary prudent buyer.” The language is quite vague and does not always clarify what disclosures are required; the safest course of action is to disclose everything. The Courts have also held that a Buyer does not need to hire multiple experts to inspect the property under the “ordinary prudent buyer” standard.
Because the Property Condition Disclosures are specifically referenced in the Real Estate Purchase Contract, they are part of the contract and failure to truthfully disclose any condition identified in the document could result in a lawsuit for breach of contract. Therefore, it is critical that Sellers provide the information identified in the document.
On the other hand, if you are a buyer, review this document carefully. If the Seller discloses an issue and the Buyer does not object in the manner required by the Real Estate Purchase Contract, the Buyer is deemed to have accepted the condition, and the Buyer will have little recourse.
The Seller’s Property Condition Disclosures covers a wide variety of areas which are critical. This includes the disclosure of expansive or collapsible soil, which can dramatically affect the value of real property and may require repairs the cost of which may exceed the value of the home. If you are a Seller, disclose any conditions of which you are aware, the cost of a lawsuit will far outweigh the amount saved in the selling price. If you are a Buyer, review the disclosures carefully and object to any disclosures you are uncomfortable with, it could save you thousands in the future. If you have any questions regarding the Seller’s Property Conditions Disclosures do not hesitate to call the attorneys at JensenBayles, LLP.
JensenBayles, LLP provides a broad spectrum of legal services. Please visit our web site www.JensenBayles.com or call 435-674-9718 and ask for James Spendlove. The information in this article is for educational purposes only and is not intended to be construed as legal advice. Please contact an attorney for legal advice specific to your situation.