I’m Eric Lanigan with Lanigan and Lanigan attorneys in Winter Park Florida. I want to talk for a minute today on the subject of real estate disclosures by the seller in the real estate transaction.
What Level of Detail Must be Disclosed?
And the question I want to pose is, is the tip of the iceberg enough? And what I mean by that is in the seller making a disclosure, is it enough just to identify the problem without giving any details?
You may watch the video on this topic called “Florida Real Estate Sellers Disclosure Form Details” on the Lanigan and Lanigan YouTube channel.
For example if someone has a disclosure and they say termites. And it says termites reported and pest control company did treatment. That’s the facts out of an actual case. The buyer ended up suing the seller for termite damages.
Now you would think, well they made the disclosure but what the evidence later showed is that there had been twelve different discoveries of termite infestation and twelve different termite treatments – all within just the previous five years. So obviously this is a property that’s sitting on top of an ocean of termites. So the problem is far more severe than just, well we had some termites and we called in a termite company and they did the treatment.
You Must Reveal the Extent of the Problem
So, basically the trial court said that, that was sufficient that they made the disclosure. The appellate court came back and reversed that decision and said you can’t get away with merely disclosing the tip of the iceberg. You must give the full extent of the problem especially when, and I think common sense comes into play here, especially when you know that what you have said really masks the problem and makes it sound like much less than it is. So you’ve got to tell what the extent of the problem is.
Hiding Defects May Lead to Lawsuits
We have an actual case ongoing right now where an individual bought a home. They moved here from the Midwest. They bought a home. On the disclosure statement was the word sinkhole. Now, they didn’t even know what a sinkhole was. And they actually got an alleged report about the amount of sinkhole damages on the property and as a result they determined what the cost of that repair would be and they entered into a contract but they lowered the purchase price down to cover the cost of those repairs.
Well, what my client subsequently found out was that the sinkhole damage literally covered the entire property and her home was literally teetering on top of the hole and that the report she got was actually only half the report. And while she had paid around $250,000 for this property the cost to repair and, whenever you’re talking about sinkholes you’re talking about maybe repair, but the cost of repair was going to be $340,000.
So, we clearly have a case where they disclosed, not only did they just disclose the tip of the iceberg, but they did everything to hide the level and severity of the iceberg that was under the water. So if you’re going to make a disclosure, you’re going to have to make the full disclosure.
When There is No Duty to Disclose
Now what if you make a partial disclosure in an area where there is no duty to disclose at all but you magnanimously put in some disclosure such as a one word type of disclosure without saying anything else. Can you get away with saying well, gee, I didn’t even have a duty to put that in there. And the answer is it won’t work.
Because even if you don’t have a duty, once you assume the duty then you likewise assume the duty to do it in its entirety. So there again you would be required to make a full disclosure. The tip of the iceberg won’t work. And I think the easy way to think of this and what I tell clients all the time is the truth is only the truth if it’s the whole truth.
Again, I’m Eric Lanigan, Lanigan and Lanigan attorneys, Winter Park, Florida.