Caveat Emptor: Is It a License to Lie, Cheat and Steal?
Last week, Lenn Harley did a great series, including one on Caveat Emptor vs. disclosure. And if you haven't read it, I suggest that you do. She makes some great points.
I sell homes in three different jurisdictions, the District of Columbia, Maryland and Virginia. And each has different rules governing property condition disclosures.
In DC, you gotta disclose, unless it's an estate or other trustee sale.
In Maryland, you have a choice. You can disclose or not - it's the seller's choice. But if there are known problems, you need to fess up about what they are.
Then there is Virginia, a Caveat Emptor jurisdiction where the seller need not disclose a thing. Buyers basically must understand that what they see is what they get - get a home inspection.
Whatever the ground rules where I happen to be selling, it's important (as Lenn says) to NOT rely solely on the seller disclosure for information about a home you plan to buy.
- Sellers, even if they have lived in the house for decades, may not be aware of problems with their homes.
- Sellers may know about problems with their homes and go to great lengths to corneal those problems.
A home is a complicated conglomeration of appliances and systems. Even if the seller is a handy person with a degree in engineering who is compulsive about maintaining the home, there may be plumbing or electrical issues that could create safety issues. There could be an extended family of termites munching their way through the basement support beams. The roof may be about to spring leaks that could ruin the plaster ceilings, and the hot water heater could be belching carbon monoxide into the chimney flue. And even the most informed, conscientious sellers may be unaware of serious issues that are not readily apparent.
Then there was the Virginia condo seller whose agent arranged and was present for the installation of new wall-to-wall carpet installation to cover up moldy, water damaged hardwood parquet floors. And there was the guy who, just before listing his home, put drywall over termite damage in the basement.
In Virginia, agents sometimes behave as though the Caveat Emptor state status goes as far as to protect sellers and agents who deliberately misrepresent their home's condition or conceal serious defects that they know about.
Whatever the laws governing the jurisdictions where I work, I have Pat's law:
- If you are my seller client, and if there are problems with your house that you know about and don't want to fix, you disclose.
- If you are my buyer client, you will have a compulsive eagle-eyed home inspector, Jay Marchanich perhaps, go over the house with a fine toothed comb and perhaps his magic camera, so you will be able to make an intelligent buying choice.
During my three-decade career, I've heard about lots of post settlement lawsuits. And most of them involved non-disclosure of known defects. None of them involved my clients, because no seller has ever been sued (that I know of) for disclosing known defects.
Even if the home inspector misses problems that were well hidden, the buyer will find out about them sooner or later. When they call a roofer who is already familiar with the leaks, or when the neighbors spill the beans at a block party about the shared termite farm, buyers will learn their seller's little secrets.
And in this town, where something like one in five adults has a law degree, that is not the best strategy. There is a line between selling a house without disclosures and committing acts of fraud, and I, for one, would like to see the Virginia law clarified. While I'm sure it was not the intention of the legislature of this commonwealth, I've run into an awful lot of agents who believe they and their clients are totally protected, even against bad behavior.