Ralph Sutton, Home Buyer in Hendersonville, NC

What is the penalty for not disclosing something on a piece of property?

Asked by Ralph Sutton, Hendersonville, NC Sun Nov 18, 2012

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There is no penalty. The Federally mandated Sellers Disclosure has never been a legally binding document and it clearly says this on the document. Since it's inception this document has in my opinion been a completely useless piece of paper serving little to no purpose.

It is the buyers duty to investigate a property thoroughly during the diligence period, and the contract you signed with the Seller not only gives you the right to do any inspection you might like but to terminate the contract fro any reason or none whatsoever during the diligence period and receive your earnest money deposit back.

The truth is most home owners really don't know much about their home and should not be relied on by a seller or their buyer broker.
1 vote Thank Flag Link Mon Nov 19, 2012
Good afternoon, Ralph:
G.S. 47E requires owners of residential real estate (single-family homes, individual condominiums, townhouses, and the like, and buildings with up to four dwelling units) to furnish purchasers a Residential Property and Owners’ Association Disclosure Statement (“Disclosure Statement”). A disclosure statement must be furnished in connection with the sale, exchange, option and sale under a lease with option to purchase (unless the tenant is already occupying or intends to occupy the dwelling). A disclosure statement is not required for some transactions, including the first sale of a dwelling which has never been inhabited and transactions of residential property made pursuant to a lease with option to purchase where the lessee occupies or intends to occupy the dwelling. For a complete list of exemptions, see G.S. 47E-2. (See also http://www.ncrec.state.nc.us/forms/rec422.pdf)

If owner checks "Yes" for any question, owner must explain answer and either describe any problem or attach a report from an engineer, contractor, pest control operator or other expert or public agency describing it. If owner attaches a report, owner will not be liable for any inaccurate or incomplete information contained in it so long as owner was not grossly negligent in obtaining or transmitting the information.

If owner checks "No", owner is stating that they have no actual knowledge of any problem. If owner checks "No" and knows there is a problem, owner may be liable for making an intentional misstatement.

If owner checks "No Representation", owner has no duty to disclose the conditions or characteristics of the property, even if owner should have known of them.

If owner checks "Yes" or "No" and something happens to the property to make Disclosure Statement incorrect or inaccurate (for example, the roof begins to leak), owner must promptly give the purchaser a corrected Disclosure Statement or correct the problem.

If owner is assisted in the sale of their property by a licensed real estate broker, they are still responsible for completing and delivering the Statement to the purchasers; and the broker must disclose any material facts about your property which they know or reasonably should know, regardless of owner responses on the Statement.. (see http://www.ncrec.state.nc.us/pdf/licensingbooklet/studyguide.pdf)

If the owner does not give buyer a Residential Property Disclosure Statement by the time buyer makes offer to purchase the property, buyer may under certain conditions cancel any resulting contract and be entitled to a refund of any deposit monies paid.

Ultimately, per standard NC offer to purchase and contract, CLOSING SHALL CONSTITUTE ACCEPTANCE OF THE PROPERTY IN ITS THEN EXISTING CONDITION UNLESS PROVISION IS OTHERWISE MADE IN WRITING. (http://www.ncrealtors.org/uploads/sample-2-T.pdf)

If you want to take action against non-disclosure, you should talk to your NC real estate attorney.

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0 votes Thank Flag Link Thu Dec 6, 2012
About the same as the penalty for meddling in the affairs of others.

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Mon Nov 19, 2012
First and formost would be the Buyer being able to walk away from the deal.
If the sales has not closed, there is no financial loss to the Buyer yet, so they have no basis for suing.
0 votes Thank Flag Link Mon Nov 19, 2012
If the buyer paid for an inspection they would not otherwise have done the buyer should seek recover of the inspection cost - whether or not the sale has closed.
Flag Wed Nov 20, 2013
Your question is open for interpretation.....however, legal consequesces would best be clarified by seeking the advice of an attorney.

With this said, holding an agent accountable for information on a subject property may be a difficult task since agent's normally get their information directly from the seller and publicize the property based upon it. If an agent receives information from a seller that is misrepresented, this could create problems.

Promoting accurate information is always a challenging issue for agents who often place their trust in others in hopes that the information provided to them is accurate. To this end, most area MLS will place a disclosure ar the bottom of each page to this effect. "Information deemed reliable but not guaranteed. Parties are advised to varify."

Good luck,

Bill
0 votes Thank Flag Link Mon Nov 19, 2012
Perhaps one could clarify the penalty due to agents who do not disclose a material fact?
0 votes Thank Flag Link Mon Nov 19, 2012
I would like to know that . But apparently an agent can lie as well as a seller and get away with it. Cause I did tell the agent and I am sure to sell the house they will have to NOT disclose this.
Flag Mon Nov 19, 2012
Thumbs up to Larry.
Finally, another voice revealing the true value of the "Home Owners Disclosure."
IT should be made abundantly clear to home buyers that home owners today can sell their homes exactly the same way banks sell their stolen goods. NO DISCLOSURE WHATSOEVER!!

Simply suggesting such a disclosure could be made places a home owner in a position of proving what they did not know. Simply asking the question establishes knowledge. Fortunately, as Larry points out, the document has never been legally binding BUT is the inspiration for a litigious society. The winners are the attorneys.

So, how does a buyer know what they are buying?
Follow the guidance of the professionals you have hired. Even then, they all embed a 'hold harmless' clause.

Of course there are many things we do not know about this situation. A compound of twelve with organic gardening structures will use more water than a couple couple occupying the same property. Who determines how much well water is sufficient?

No disclosures. No exceptions.
0 votes Thank Flag Link Mon Nov 19, 2012
Hello Mr. Sutton! Thank you for your quetion.

In North Carlolina, there is a Property Disclosure form for homes that is competed by the the seller. They may elect to say "Yes", "No", or "No Representation" to questions about problems with the home. A seller is not obligated to disclose anything about their property. However, most sellers do outline known problems on the form, which buyers recieve prior to making an offer. North Carolina is a "Buyer Beware" State. When and offer is accepted, there is a due dillagence time negotiated in the contract for the Buyer to inspect the home, check on home owners association restrictions, and check on any other items relevent to the property. At the end of the due dillegence period, the buyer may choose to buy the property or not. It is a bit more complicated than the above discription. And some things do slip through the cracks. In that case, you may want to consult the closing attorney that represented you at closing.
0 votes Thank Flag Link Sun Nov 18, 2012
I had to sign quitclaim deed in my divorce. Though I still have my name on loan. So if a seller chooses to lie to a buyer, even though the realtor knows, they can lie also and say they didnt know and the buyer gets screwed? I need to get out of this state.
Flag Sun Nov 18, 2012
The penalty, if any, depends on what was not disclosed and who did not disclose it. Give more info and I will give you more feedback.
0 votes Thank Flag Link Sun Nov 18, 2012
I told the realtor that the well on this property has had problems. Now I lost this house in a divorce. But my ex did not tell the realtor about the well situation, so I did it myself. Now since the realtor does know do they have to disclose it? I do plan to go to new owners to tell them that the realtor was told. I even have emails to and from the realtor. So they cant say they didnt know. So if the house is sold and the new owners didnt get told, is there an illegal action here?
Flag Sun Nov 18, 2012
Great question Ralph,

I think your question to be more specific. On residential real estate, home owners are asked to fill out a disclosure where they state either something is or is not working, if there has been an issue previously etc. They can also choose to not answer any question, which in my opinion could raise a red flag.

In any transaction a reputable professional real estate agent is a must.

Sally Benfer
Cricket Realty
Sally@cricket-realty.com
0 votes Thank Flag Link Sun Nov 18, 2012
Ok I will put it another way. A house I was living in and lost to my wife is now for sale. She never told the realtor about the well problem but I contacted them and told them. Now after the house is sold I am going up to the new owners and ask if they were told. Now if they werent, is that an illegal action?
Flag Sun Nov 18, 2012
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