When to update a ‘Disclosure Form’
On April 9, 2012
By Peg Ritenour
A hot topic at a recent meeting of the Ohio Real Estate Commission was the question of when does a seller need to update the Residential Property Disclosure Form?
Concern was raised by several Commissioners that forms were not being updated even though the house had been on the market for more than a year and information on the form that the seller provided at the time of listing is no longer accurate. That may be because new problems have occurred since the property was listed or because issues were uncovered in an inspection that results in the property going back on the market.
In determining whether a form should be updated, the sellers’ focus should be on providing up-to-date information about the current condition of the property. To protect themselves from a claim of misrepresentation and fraud, the information provided by the seller on the Residential Property Disclosure form must meet two standards:
- First, the information provided must be based on the seller’s actual knowledge;
- and secondly, the disclosures must be made by the seller in good faith. Good faith is defined in the statute as “honesty in fact.” Basically this means the seller doesn’t want to provide information they know isn’t true.
So what does this mean for you as an agent? This means that you want to make sure that your seller isn’t inadvertently providing a Disclosure Form to buyers that contains information that the seller (and you) knows may not be completely accurate. Based on the concerns raised by the Real Estate Commission regarding REALTOR’s duties in this regard, the following are some best practices to protect you and your seller:
- If it’s been several months since the seller completed the form, have them review it to make sure their answers haven’t changed. A good rule of thumb is to have the seller do this when you are renewing the listing.
- If you represent a buyer who is making an offer on a property that has been on the market for a long time, ask the seller to provide an updated form or affirm that their answers are still accurate;
- If an inspection is done on the property that reveals problems, and the property ends up back on the market, the seller should revise the Property Disclosure Form to make sure complete and accurate information is being provided to future buyers. If the seller questions the inspector’s findings the seller should be have their own inspection done. However even if the seller’s inspection contradicts the first report, the findings of both the “good” and “bad” report should be provided to subsequent purchasers. As the listing agent you definitely don’t want to decide which inspector is right or withhold any information that a buyer may consider material.