I’m Eric Lanigan with Lanigan and Lanigan attorneys in Winter Park Florida. I want to talk for a few minutes about the area of real estate disclosures and specifically actual knowledge versus what you should have known.
Watch the video “What to Include on Florida Sellers Disclosure Form” on the Lanigan & Lanigan YouTube channel.
Sellers Disclosure Form: You Should Have Known
Am I only required to disclosed with what I actually know or am I charged with knowledge of what I reasonably should have known?
Now generally the law judges someone by what they reasonably should know. In other words you can’t turn a blind eye to what’s going around you. However, at least in Florida, the real estate decisions have taken a more conservative approach.
Actual knowledge of a defect is actually required. The leading case in Florida is a case called Jensen vs. Bailey and in this case renovations on a house were done by a contractor and they were not done to code. The buyer ended up suing the seller when they found out several different rooms had been renovated and there were several building code violations and the repairs were going to be extensive.
And although the seller claimed to have had no actual knowledge, the trial court held that they either should have known of these defects or that they had constructive knowledge of the defects. Now constructive knowledge in the law is where the law charges you with knowing something even though you don’t actually know it.
Real Estate Constructive Knowledge
For example in the corporate world, corporate officers are deemed to have constructive knowledge of what other corporate officers know. So a president of a corporation can’t say, “well, gee I never knew that but all the vice presidents knew it and the secretary of the corporation and the corporate financial officer knew it.”
If it’s known by other corporate officers then he’s deemed to know it to have constructive knowledge of it.
So the trial court said that the homeowner was liable. The case went up on appeal. The appellate court reversed and said that you must have actual knowledge of the defect. No constructive knowledge, no should have known through reasonable care.
Now homeowners beware because the law is also that a jury can determine through circumstantial evidence that you did actually know regardless of what you say. For instance in that Jensen case, if the evidence had been if the seller had actually helped with the work, that the seller had handled the permitting on the job or that the seller was very knowledgeable in construction methods then a jury could say through that circumstantial evidence that we find that he did have actual knowledge.
And generally speaking always keep in mind in these kinds of buyer versus seller cases, in my experience the sympathy is generally with the buyer not with the seller. I think the bottom line is this if you know of a problem or you have a pretty good suspicion that there is one make the disclosure. What you might lose in a lower selling price I can guarantee you will be nothing compared to the cost of litigation.
Again I’m Eric Lanigan with Lanigan and Lanigan attorneys, Winter Park, Florida.