“Why didn’t they tell us about that?”
Recently, one of our clients purchased a home, a tri-level built in 1970 located in Lake county. 11 months later, our client is home watching television in the middle of Winter and hears a loud vibrating sound. He goes down to the basement to investigate and notices the furnace has completely stopped working. He remembers the previous homeowner had told him the furnace was dated and nearing the end of its normal life expectancy. As a result, from that “heads up” the seller had given him he was prepared and had saved some money for that dreadful day.
“What is a residential real estate disclosure form?”
A real estate sales disclosure form is a checklist style document that Indiana law requires most sellers complete prior to closing on the property. This purpose of this document is to allow the seller an opportunity to disclose any known facts about the property and its condition.
In the past, Indian law has always supported “let the buyer beware,” and held the buyer responsible to hire an inspector to uncover the condition of the home. However, in the last 15 years, Indiana legislature became more protective on the homeowners’ behalf. Recently, Indiana courts began holding the homeowner responsible if known defects were hidden from the prospective buyer.
Here’s the Link to where you can find the Sellers Disclosure form. There’s no page, but a link to a PDF. You’ll see it on this State of Indiana website search results page :
“What should be disclosed to the home buyer?”
Indiana’s Residential Real Estate Disclosure Law, Indiana Code 32-21-5-2 requires the property seller to complete the Disclosure Form, which is available on-line. Most realtors are familiar with this form and have one readily available.
The seller is required, to the best of his/her knowledge, to inform the buyer of any known material defects within the home and its major systems. For example, if the seller has knowledge of the property existing on a floodplain or the foundation is leaning should be disclosed. However, this is where is gets slippery because the buyer can’t prove what the seller knows/doesn’t know and should disclose. The buyer is really counting on the seller’s full compliance regarding accuracy and being fully forthcoming with information about known defects. Unfortunately, not all sellers are completely forthcoming and honest regarding disclosing everything they know about the property on this form. Typically, our inspectors will discover any hidden, undisclosed defects and include them in the inspection report for the buyer. Often, the seller will deny knowing about the defect if confronted.
On the other hand, sometimes a major defect is discovered during the inspection that wasn’t disclosed on the form and the seller truthfully did not know about, which does happen often. For example, the seller has not been up into that dusty old attic in 20 years. The inspector discovers surface bio-growth (aka Mold), Vermiculite insulation containing Asbestos, and many electrical hazards in the attic space and the buyer wonders why the seller didn’t disclose these issues. The seller wasn’t able to disclose this information because they honestly weren’t aware of these defects. Buyers and realtors shouldn’t expect sellers to be qualified and able to identify major defects. Hence, the importance of a buyer’s due diligence and the hiring a quality inspector to fully inspect the house.
Several instances Certified Home Inspections has been called out to, coincidentally, inspect the same house twice for two different buyers on different days. Most times, if major defects were found weeks before on the original inspection, much to our surprise, they were not disclosed to the second buyer. The seller did not anticipate the same inspector, who has prior knowledge of defects, would be returning for a different client on another day. “What’s the chances of that happening, right?” Actually, pretty good as we receive many inspection requests each day from prospective home buyers and have inspected the same house for different buyers on separate days several times in our history.
Our advice to the home buyer:
The information included in the seller’s disclosure form, if accurate, can very useful to the home buyer. Most of the time homeowners are honest and forthcoming with prior knowledge of major defects and do properly disclose that information. However, most homeowners aren’t qualified to identify major structural defects or foundation issues and major defects do exist within the home that aren’t included on this disclosure form. We recommend the buyer be diligent and hire a third party, unbiased inspector to discover any hidden major defects the seller was either unaware of, or unwilling to disclose and were not included on this form.