For Sale: Home in Gated Community with Wood Rot and Termite Infestation
For Sale: Four bedrooms, Three & ½ Bath Home in Gated Community with Wood Rot and Termite Infestation
As every Florida real estate professional is aware, sellers of residential property have long been under a duty to disclose material known defects that may affect the value of the home. In 1985, the Florida Supreme Court created a cause of action for failing to disclose facts to the buyer if the seller: (1) has knowledge of a defect in the property; (2) the defect is not readily observable and unknown to the buyer; (3) the defect materially affects the value of the property; and (4) the buyer is damaged by the failure to disclose. Johnson v. Davis, 480 So. 2d 625 (Fla. 1985).
Disputes over a sellers’ alleged failure to disclose defects turn on the facts and circumstances of each case. A seller may defend on several grounds such as the seller did, in fact, disclose all facts regarding the defect; the defect was obvious to the buyer, the buyer had actual knowledge of the defect, or the sellers had no knowledge of the defect. See Jensen v. Bailey, 76 So. 3d 980 (Fla. 2d DCA 2011).
The realtors involved in a sale transaction must also be vigilant when it comes to such facts or defects. The duty to disclose also extends to the listing agent. See Raymer v. Wise Realty of Tallahassee, 504 So. 2d 1361 (Fla. 1st DCA 1987) (holding agent liable for failure to disclose termite infestation); Newbern v. Mansbach, 777 So. 2d 1044 (Fla. 1st DCA 2001) (reversing summary judgment in favor of agent that failed to disclose ineligibility for flood insurance).
Finally, the duty to disclose is not negated by an “As-Is” sale contract. The seller (and potentially the agent) remains under a duty to disclose. In fact, the duty to disclose is addressed in the Florida Association of Realtors/the Florida Bar (“FAR/BAR”) forms. The As-Is Residential Contract for Sale and Purchase in Paragraph 10(j), states: “SELLER DISCLOSURE: Seller knows of no facts materially affecting the value of the Real Property which are not readily observable and which have not been disclosed to Buyer.”
In conclusion, a seller and listing agent should err on the side of caution and fully disclose all defects and facts known that could reasonably impact the value of a home. If you are facing demands made by a buyer after a closing or if you would like to discuss potential liability under a particular factual scenario, contact one of the experienced real estate attorneys at the Moorhead Real Estate Law Group for a consultation.