Ep. 85 – Sellers Disclosure

Matthew Maschler:
Welcome to the Real Estate Finder podcast. I’m Matthew Maschler, real estate broker with the signature real estate companies and the great state of Florida. And with me, the co-host of the Real Estate Finder podcast, Stacy Garcia and Stacy. Today I wanna talk about something that, uh, that came up the other day, uh, with one of my agents. Um, and it’s about seller’s disclosures. And I wanted to, uh, make this episode so that way I can point to it later in the future. When someone asked me a question about seller’s disclosures, uh, what happened with this particular, uh, customer or with this particular agent, is, um, they represented the buyer and they asked for the seller’s disclosures. Mm-hmm. <affirmative>, and the seller said, no, really? And, uh, and the agent called me up all upset. The, the, the seller won’t, um, gimme the seller’s disclosures. And I’m saying, you’re saying the seller’s disclosures as if that’s a thing.
Right? Right. You know, what is it? What, what, what is seller’s disclosures? So that’s what I want to answer here today. Okay. Okay. So, Florida, um, is basically a buyer beware state. Um, if you buy a property, uh, you have to have your eyes open. You have to look at the property, you have to inspect the property, and, uh, no one’s gonna do it for you. Uh, our friends in New Jersey, a lot of the towns in New Jersey, um, there, the town has to issue a certificate of occupancy. So, during the contract period, uh, a town official will come in and inspect the property, and if there’s broken windows or an out-of-date boiler or problem with the electric box, they fail it. And then it’s on the seller to, to fix these things, to get the certificate of occupancy. Um, in Florida, the house could be falling down and nobody would say boo <laugh>.
Um, and we have the inspection period, and, and we have it as is contract. And, and it’s up to the buyer to be aware of, um, of, of what they’re buying. Right. And, um, you know, they could buy termite infested mold infested houses, and, and, and that’s on them. And, uh, and it’s hard to later go back to the, this seller and say, Hey, you sold me this house, it’s termite infested and filled with mold. And the seller’s like, yeah, I did. Right. So, what is the seller’s obligation to disclose? Mm-hmm. <affirmative> seller is obligated to disclose any material defect that is not readily, uh, um, discoverable or, or, or learnable, I feel now I’m forgetting the word, I’m drawing a blank on it. Um, easily apparent, observed, observed by the buyer, um, that would affect the mat, the value of the home, right? Right.
So a material de it has to be, so it’s three things. Material de defect that’s not observable. Mm-hmm. <affirmative>, that, that’s hidden somehow. That’s, um, and that it has to materially affect the value of the home. So if you’re selling the mold infested, bug infested, broken down house, and, and you priced it at the value of the condition of the house, even if the buyer didn’t know, right? Mm-hmm. <affirmative>, um, well, that was the value of the house. Had the buyer known it wouldn’t have lowered the value of the house. You priced it, you know, accordingly, accordingly, if you priced it as if it was a perfectly good house, and the buyer paid thinking it was a perfectly good house, you know, then those defects would, would materially affect the price. Um, so material, it has to be a material defect. Um, what is a material defect?
It has to be substantial. It has to matter, right? It can’t be, um, you know, the every inspection report says the G fci, uh, outlets are no good. Right? Right. It, it, it has to, um, you know, it, so in foundation, you know, you know, it can’t be that the roof is at the end of its useful life, right? The roof is leaking, the roof doesn’t work, right? Mm-hmm. <affirmative>. Now, the buyer also can’t be willfully blind, and the buyer has to look and, and the buyer has the right to make an inspection. Right? And if, if the buyer’s gonna say, this seller, Hey, seller, you failed to disclose this. And, uh, well, Mr. Buyer, you had a seven day inspection period. You didn’t inspect it. Right? You know, any inspector would’ve found it, right? So the seller’s, seller’s not, not liable, you know, because a, a, a reasonable inspection would’ve discovered it. So it has to be material, it has to be hidden somehow. There was no way the buyer could have known, the buyer saw the house, he hired an inspector, and he still did not know about this thing, right? Uh, that those once every hundred year locusts, right? Right. Right. I mean, still did not know. There was no way he could have known, right? Um, the, the house was in a flight path, but the flights were seasonal, right? So the buyer inspected the house in the summer, right? And they didn’t know, right? Well,
Staci Garcia:
This is something we talked about, because when, um, Trump was in the White House, all the air traffic was mm-hmm. <affirmative> diverted, and a lot of people were landing in Boca mm-hmm. <affirmative>. And so the people in the flight path, um, who might not have noticed that they were in the flight path pre, previously, right? All of a sudden were like, what is going
Matthew Maschler:
On? Right? Cause one flight a day, and all of a sudden it became multiple, multiple
Staci Garcia:
Flights every
Matthew Maschler:
Yeah. All the time, right? So, um, so now, so now the seller goes to sell it, right? And they knew about the thing, they didn’t disclose it to the buyer, right? So the buyer would have to one, prove its material. Mm-hmm. <affirmative>, right? Is it really a defect? Right? Could the buyer have known? No. No. Right? No, no house inspection, no home inspector buyer’s not inspected to go to go to Flight Path. All right? So, but, but I, if I was a seller, I’d argue it wasn’t material. Right? Material couldn’t readily be observed and has to affect the value. And maybe it did, maybe it did affect the, maybe the, the prices of these comparable homes have all went down and Yeah, absolutely. Okay. I’m sorry you didn’t know, right? But that’s why you, we price it at seven 50, it was worth 800. But because of this problem, the houses are selling seven 50 mm-hmm.
<affirmative>. Okay? So that’s, that’s the seller’s obligation, right? So we’re back to what is the seller’s disclosure? Um, a good practice. I, I like to say, like, when, when I, when I list the property, um, I can’t say when I list the property, cuz I know some of our clients are listening and they probably don’t do this, right? Right. So, if, if I’ve 20 agents, and if my agents aren’t doing this, I can’t say that my agents do this. So that’s one of the reasons I want my agents listening to my podcast. Okay? A good practice when you represent the, the seller, when you take the listing is have the seller fill out a seller’s disclosure, right? And either keep it in your pocket or attach it to the mls. The, now the seller’s disclosure is not required. It’s not a required document. The way I look at it as it protects the seller, Mr.
Sell. And so, Mr. Seller, we’d like you to fill out the seller’s disclosure. I don’t want to <laugh>, that’s fine. But just be aware that you have this obligation to disclose all material defects that aren’t readily observable, and that may affect the value of the house by filling out this seller’s disclosure and disclosing it to the, to the buyer. You’ve made yourself bulletproof, right? As long as you fill it out, truthfully, right? You’ve made your Bulletproof for a future claim by the buyer saying you failed to disclose, you fill, because everything that’s possibly disclosable is in the form. Fill it out. Truthfully, it asks you about the roof, it asked you about binding it, asked you about the property, you filled out the entire form, truthfully. Mm-hmm. <affirmative>, you disclose it to the buyer and the buyer can’t make a claim later that you failed to disclose.
Is it required by Florida law? No. But it protects you, Mr. Your seller. So that’s what I say to my sellers, right? Um, and the best practice is do it when you get your listing agreement. I, I, I don’t like to do it before I get the listing agreement signed. Yeah. I don’t like to do it. As soon as the listing agreement signed one, it keeps the seller off my ass while I’m getting the pictures. Yeah. And, and doing everything and getting ready to get it and ready to list. Yeah. Mrs. Seller. Okay. You know, hey, thanks, thanks for signing this. Please fill out this form. I have all this other things to do, but while I get the house listed, it gives the seller something to do. And it is a quite a extensive, it is, it, it, it takes time to do it.
So it gives the seller something to do while I’m getting the house ready, ready to market. Uh, and then I have it, and I don’t have to ask for it later. Uh, when, why haven’t we got any showings? Or why are the offers thing we finally, you gotta, you gotta low offer, you get the seller to reluctantly agree. Now, you’re gonna first ask for the seller’s disclosure. It’s awkward, right? So as soon as you get that listing agreement signed is the best time to ask the seller to, uh, fill out the seller’s disclosure, and you put it in the MLS under documents and you forget it. You never have to look at it again. You don’t have to get to the buyer to sign it or anything like that. If, um, if the buyer ever wants it, it’s there. You know, if the seller has, now here’s an open, open question.
I don’t know the answer to this one. The seller has an obligation to disclose, and you put it in the seller’s disclosure in the mls, right? Can the buyer say, I never got it. It’s like, well, you should have looked there. Right? Maybe blame their agent. So agents out there, buyer’s agents out there, always look at the documents to see if there’s a seller’s disclosure, and make sure you give that to your buyer. Um, okay. So best time to ask for it. So it protects the seller. The, they’re not required to sign it. There’s, there’s no obligation to sign. It’s not Florida law that they have to sign it. There’s, there’s, there’s no rule that says a seller has to sign a seller’s disclosure. Um, but it’s good practice. It protects the seller. The best time as a listing agent, the best time to, uh, have it filled out and signed.
And you want your sellers to sign, fill it out by hand. You don’t wanna, you, you don’t wanna fill it out for them and have them, you know, send out an auto signature and they don’t even see it. Have them fill it out by hand. So they really take the time and care and energy to fill out the seller’s disclosure and then disclose that to the buyer. Now, if the buyer, as a buyer’s agent in your practice, you, you can make a decision in your practice. Do you want to ask for a seller’s disclosure? Um, I go back and forth by it, right? I, you know, why do I wanna protect the seller by asking for it, right? But then again, why do I wanna hurt the buyer? Why don’t I want to give the buyer as much information as possible? Um, so if you’re, if you’ve, if you’ve decided as a buyer’s agent that this is something you want, you must ask for it in the contract.
After the contract is signed, if the buyer’s agent says to me, where’s the seller’s disclosure? I’ll say, agu, I don’t have to give you a seller’s disclosure. <laugh>, right? But I went on, and then it goes back and forth. Now, you ask the seller for the first time, and the seller doesn’t want to do it. And, and it’s awkward after the contract is signed, there’s no obligation for the seller to provide the seller’s disclosure except for the, the statutory obligations. Um, so if you’re the type of buyer’s agent who is going to ask for a seller’s disclosure, make sure you put that in your offer in additional terms or seller to provide, um, seller’s disclosure within x number of days. And you want that within the inspection period. If you say, you know, if the inspection period’s seven days and on the eighth day, the seller provides the seller disclosure, right?
Can’t do anything about it. If you don’t like what’s in it, you can’t do anything about it. Um, I don’t know what would happen, right? If, if there really is something that’s, that’s, that’s hidden, right? That’s material that’s not observable. And, and the, the seller waits till the day after we, the, the inspection period ends on Friday and on Monday, here’s the, here’s the seller’s disclosure, and then there’s something there, right? That roof is really, really shitty. Right? Right. The buyer can’t do anything about it. Did the seller fail to disclose it? Yeah. If the buyer didn’t really know when he negotiated, I think, I think that is a failure to disclose. Uh, cause the buyer doesn’t have anything to do about it if the buyer has no recourse, right? Oh, I didn’t know, had I known this thing, I wouldn’t have bought the house, or I wouldn’t have paid what I paid.
Um, so sellers, I don’t want out there, I don’t want you to be cute and give the sellers disclosure the day after the inspections. Right? That’s why you wanna give it nice and early in the mls. Cause you, you give it in the mls and it gives you a really, really good argument later. Mm-hmm. <affirmative>, right? When, so you put it in the mls, right? And then, and then let’s say the buyer never even saw it. Right? Now it’s inspections and they ask for X, Y, and Z. Um, the whole thing about, you know, as is with right to re renegotiate, right? It really should be for things that the buyer didn’t know about. Right? The buyer saw the property, they knew there was a broken window, then they made an offer, right? You could, it’s, it’s not fair. You can, I, I, I can’t say you can’t ask, but you can ask, you can ask for anything you want, but it’s not cool, right?
It’s not right to ask for something that you knew about when you made your, uh, when, when you made your offer. So if you ask for something, and it’s in the seller’s disclosure, say, you know, you know, dear Mr. Seller, please provide a credit for the following. Dear Mr. Buyer. All of these things were in the seller’s disclosure that was readily apparent in the MLS you knew about them, or should have known about them when you saw the property, and when you made the offer, when you made the offer of seven 50. Right? You knew about what was in the seller disclosure, right? Right. You, you knew about these defects. Why did you offer seven 50 if you knew about these defects? Right? Negotiation here should be for things that you didn’t know about that your inspected discovered, but you, you knew about, oh, we didn’t read the seller’s disclosure.
That puts, that puts, that puts a real pressure back on that buyer’s agent, right? Um, you know, for, for, for not doing their job and not showing that, uh, that seller’s disclosure. So buyers, when you’re, when you’re showing, you could ask for that seller’s disclosure, Hey, we’re thinking of making an offer. Can you share with us a seller’s disclosure? You could ask for it. Seller could say yes or no. I think if you’re looking to make an offer, I think a smart seller would give that seller’s disclosure, which again, is why you should get one when you, when you sign the listing agreement on the mls. But it makes, so another advantage to the seller is it makes that negotiation later. Um, it gives you a, a little bit of leverage to say no to a buyer and put them in a real awkward PO position, um, put their agent in, in, in a weak position in that negotiation.
No, that’s a good idea. But again, if you’re a buyer’s agent, you want it, you put in the contract that seller to provide seller’s disclosure within x number of days from date of execution, and make sure that that is within the inspection period. Right? Um, you know, if in that way it’s a contractual term, once it’s a contractual term, the seller agreed to it. Now the buyer says, Hey, Mr. Mr. Listing agent, I mean, sellers disclosure, oh, Florida doesn’t require a seller disclosure. No, I know Florida doesn’t, but this contract does. Right? Right. You, we agreed that you would provide a seller’s disclosure, right? Um, where would you put that in your, in, in the additional terms? Okay? But, uh, seller, to provide a seller’s disclosure within three days of execution, you put it in the additional terms. Make sure it’s before your inspection period ends.
Um, because if it’s after the inspection period ends, then there’s a very good argument that the seller can make, that they can give that seller’s disclosure after the inspection, right? And the buyer has no recourse. So make sure you, you don’t end the period. Um, and then if it’s the last day of inspections mm-hmm. <affirmative>, um, and you haven’t, and you’ve asked for that seller’s disclosure, you haven’t received it, um, make sure you extend the inspection period. Uh, dear Mr. Seller, you know, we’ve asked for the seller’s disclosure. Today’s the last day of inspection period. Please extend the, you know, here’s an addendum to, um, extend the extension agreement, the, the, uh, inspection period until Monday or until next week, uh, to give you time to, uh, file the inspection, period. Otherwise, we’re gonna cancel the contract. Right? Um, so that’s a seller’s disclosure. Not required by not required, not a required document.
There’s no required form. We have our form at signature, no required form, but it protects the seller, uh, from any possible failure to disclose that can also protect the seller later during inspections. And a, um, and a a if you’re the buyer’s agent or a buyer and you want a seller’s disclosure, you must ask for it, um, in your offer. That’s pretty smart. And that is, uh, my podcast and what I wanna say about sellers disclosures. And that way, whatever it comes up, it’ll tell somebody. Please point to this, uh, episode of the Real Estate Finder podcast. Awesome. Awesome. Thank you for joining us, and we will see you next week. Matthew ler realestate finder.com. Stacey Garcia, no hoa boca.com.
Speaker 3:
The future looks bright and the storms pass by the sky blue. It’s almost that light shows cameras flash when I in the moment. They saved the best for last Matthew Mania. We about to make a splash. Life is a marathon full of sharp turns, gotta keep pace while the hands on the clock turns high stake Fivestar real estate. I run a show, you can tell the boss plate, electricity, energy, vibrate. I’m always on time. Even if I’m late, I make dreams come true. Living my life.
Speaker 4:
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