To Disclose or Not To Disclose Defects When Selling Property

Washington law requires a person selling real estate to fill out what is commonly called the “Seller Disclosure Statement” and provide that statement to the buyer. The form requires the seller to answer questions on various topics such as defects in water sources and systems, sewer or septic systems, structural issues, electrical and heating systems, and environmental issues. The form includes “yes”, “no”, or “don’t know” boxes for the seller to check for each question. The form can be found online in Revised Code of Washington Chapter 64.06.

The disclosure statement can create confusion for sellers about what to disclose and how much to disclose. It can also create confusion for buyers about how to respond to answers given by the seller. This confusion can lead to lawsuits over what should have been disclosed. In the experience of our real estate attorneys, some general tips can help both sellers and buyers in real estate transactions.

First, the seller has a duty to disclose presently existing defects the seller knows about. If the seller knows about a defect (or even potential defect), the seller should disclose it to the buyer. But if the seller does not know about the defect, the seller has no ability and no duty to disclose it. Additionally, there is generally no obligation to disclose a defect that has been repaired. Once repaired, there is no longer any defect.

Second, if the defect is visible and apparent to the buyer, the seller has no duty to disclose the defect. The law goes one step further and even provides that the seller has no duty to disclose a defect if a careful, reasonable inspection of the property by the buyer would have revealed the defect. However, when in doubt, sellers should generally disclose any issue to be on the safe side. Informing the buyer of a defect greatly reduces the chances the buyer will sue the seller later, and will greatly improve the seller’s chances of winning any lawsuit that may be filed by the buyer.

Third, if the buyer is put on notice of a defect, the buyer should fully inspect and investigate the issue to his or her satisfaction. A buyer could be put on notice of a defect in various ways, most commonly by being told about it by the seller or by seeing the defect first hand. A buyer is generally precluded from suing a seller for a defect the buyer knew about, even if the defect turns out to be bigger than the buyer initially thought. Thus, buyers should fully inspect anything they think might be an issue with the property before going through with the sale.

To help a sale transaction go smoothly, sellers should fully disclose any defects with the property and buyers should fully investigate any defects they have notice about. This greatly reduces the likelihood of the parties being involved in a costly lawsuit over whether an issue should have been disclosed or not. If you do find yourself in a lawsuit over these issues or have questions about what to disclose or investigate, Carmichael Clark’s real estate attorneys can help you navigate the process.