Seller's Disclosures Are Required by Law... Right?

The short answer is "Yes." For any 1-4 family residential dwelling, seller's are required to disclose information regarding the condition of the property pursuant to MCL 565.953, commonly known as the Seller's Disclosure Act.

The SDA was intended to reduce litigation on the assumption that if sellers made full disclosure of what they knew about the physical condition of their properties to buyers, and could prove they made such disclosure, the incidents of litigation between sellers and buyers for alleged misrepresentations about defects in a home would decline.

But it only works when seller's actually fill out the disclosures. We see "Seller has never lived in property" all the time, written in bold oversized lettering across the forms. I'll bring this to the Listing Agents attention, and ask which exemption to the SDA they are using. I'll get pushback, as if my desire to follow the laws and protect all from liability and lawsuits is a personal affront on the seller's character.

Omitting information from a Seller’s Disclosure Statement or providing false information in a Seller’s Disclosure Statement may be used as evidence of common law fraud. Smith v Cristoforo, docket number 266942, 2007 WL 866229 (March 2007); Elliott v Therrien, docket number 288235, 2010 WL 293071 (Jan. 2010).

The following are exempt from compliance with the SDA (MCL 565.953): 1) Transfers made pursuant to a court order, including orders by a probate court in administration of estate; transfers by any foreclosure sale; transfers by a trustee in bankruptcy; transfers through condemnation; and transfers resulting from an order for specific performance. 2) Deeds in lieu of foreclosure or quit claim deeds from a mortgagor to a mortgagee. 3) Transfers by a fiduciary who does not occupy the residential real estate in the course of administration of a decedent’s estate, guardianship, conservatorship or trust. 4) Transfers from one co-tenant to one or more other co-tenants. 5) Transfers made to a spouse, parent, grandparent, child or grandchild. 6) Transfers resulting from a judgment of divorce. 7) Transfers to or from any governmental entity. 8) Transfers made by a licensed home builder of newly constructed residential property that has not been inhabited.

The long and short of it is that, for everyone's sake, have your seller's fill out disclosures properly and honestly.

Excerpts of this post were taken from Michigan Realtors®, SELLER’S DISCLOSURE AND AGENCY DISCLOSURE AFTER 20 YEARS August 2013

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