You may find when shopping for a home that the seller, who has often lived in that home for many years, seems to know very little about the condition of the home. This happens even though Maryland law requires the seller to give prospective buyers a disclosure or disclaimer statement on or before entering into a contract of sale. Read through the four pages of the typical statement and most buyers will conclude; “We better get a home inspection.”
The disclosure/disclaimer is the seller’s opportunity to be transparent about the property. They can tell what they know about foundation problems, roof leaks, basement moisture, plumbing, heating, and air conditioning systems, and much more. But, in my experience, most sellers decline to share what they know – and for good reason. Sellers are often concerned that making a representation about the property’s condition will potentially expose them to a lawsuit if a buyer later discovers a problem that was not disclosed or inaccurately disclosed. For example, the seller discloses that the basement is not damp, but the buyer finds water in the basement the following spring after two weeks of rainy weather.
To sidestep that risk sellers instead make a disclaimer statement in which they make no warranties or representations about the property condition. They caution the buyer that they will be purchasing the home “as is” with all its defects. The only exception to the “as is” provision is defects specifically noted in the contract. For example, the buyer notices that the roof is old and specifically includes a provision in the contract that requires the seller to replace the roof before closing.
A seller that elects to disclaim and sell the property “as is” is still required under law to disclose latent defects that the seller knows about. A latent defect is a defect that a reasonable person would consider important, that poses a threat to health or safety, and that is not obvious from careful visual inspection. For example, a seller’s knowledge about mold in the attic, which is not accessible for inspection, should be disclosed as a latent defect.
Buyers should protect their options with a home inspection. Make your offer contingent on an inspection for structural and mechanical defects, mold, termite damage and radon. The inspection contingency gives the buyer the option to walk away from a contract, without losing the buyer’s deposit, if the problems are serious. Alternatively, the buyer can deliver the inspection report to the seller with a request that they correct some of the problems. The seller then has the option of agreeing to some or all of the repairs or rejecting the buyer’s request. If the seller rejects the buyer, the buyer can cancel the contract or choose to go forward with the purchase and fix the problems themselves.
A thorough home inspection isn’t cheap ($500+), but its value in knowledge, negotiating power, and avoiding big mistakes is even greater.
