How to Avoid Getting Sued When Selling Your Home

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Selling your house can be stressful, especially if you want to sell it quickly. You may even be tempted not to reveal certain things about the house that may slow down or even blow the sale. Bad idea.

Failing to disclose even a minor problem with the property may lead to nasty confrontation in front of a judge. In general, the National Association of Realtors (NAR) recommends that if you are in doubt about whether or not to reveal an issue, take a deep breath and disclose the problem.

Kansas real estate attorney Rick Davis puts it bluntly:

Most sellers think it is in their best interest to disclose as little as possible. I completely disagree with this sentiment. In the vast majority of cases, disclosing the additional information (especially if it is something that was previously repaired), will not cause a buyer to back out or ask for a price reduction.

Why disclose a repair you’ve already made? Because if the buyer later discovers that the repair job was incorrectly done, the seller could be liable for additional repair costs.

Sellers should disclose everything they can think of, according to Adam Buck, an Arizona-based real estate specialist. The more you disclose, the less important the disclosures might seem to a potential buyer.

The good news for sellers is that you do not have to disclose something you are unaware of. That may seem obvious. If you provide a potential buyer with copies of any inspection reports you have (no matter how old), and a list of what you know to be issues, then if something goes wrong with the house after the sale, the burden falls to the buyer who may have failed to do their own inspections and due diligence prior to the sale.

The NAR points out a common area of dispute: just how big is the house? There is no single standard for measuring the square footage of a house. That could lead to several different measurements and it is always a bad idea for a seller either to pick one or compute an average or come up with some other way to answer the question. Far better is to say you don’t know. Then add a clause to the purchase contract that states that any square foot measurement is an approximation and if the buyers really wants an accurate measurement they need to get it for themselves.

Adam Buck sums it up neatly, “It is much better to lose a buyer by clearly disclosing all known issues than it is to spend two years and tens of thousands of dollars in litigation.”

Words to the wise.