Last Update: 8/15/18
Disclosure of facts that materially affect the value of real estate doesn’t always happen in residential real estate sales because sellers fret that if the buyer hears something bad, they’ll walk away — or, counter with a price which is much lower than the listed sales price. Fortunately for buyers, Florida law requires that sellers disclose known defects involving Florida residential real estate; sellers who fail to disclose these defects will most likely be held to account under Florida’s real estate disclosure laws.
In Florida residential real property transactions, sellers have a legal duty to disclose to someone who is considering purchasing a piece of real estate all known material facts about that property, as a general rule. Specific laws, in fact, have been passed to make sure that buyers are informed of especially important information, including things like property taxes – See Florida Statute 689.261.
Other issues, however, are not specifically required to be disclosed to the buyer under Florida law – for example Florida Statute 689.25 regarding disclosure of any homicide, suicide, deaths, or diagnosis of HIV or AIDS infection in an occupant of real property.
(1)(a) The fact that an occupant of real property is infected or has been infected with human immunodeficiency virus or diagnosed with acquired immune deficiency syndrome is not a material fact that must be disclosed in a real estate transaction.
(b) The fact that a property was, or was at any time suspected to have been, the site of a homicide, suicide, or death is not a material fact that must be disclosed in a real estate transaction.
(2) A cause of action shall not arise against an owner of real property, his or her agent, an agent of a transferee of real property, or a person licensed under chapter 475 for the failure to disclose to the transferee that the property was or was suspected to have been the site of a homicide, suicide, or death or that an occupant of that property was infected with human immunodeficiency virus or diagnosed with acquired immune deficiency syndrome.
As explained by the Florida Supreme Court in Johnson v. Davis:
One should not be able to stand behind the impervious shield of caveat emptor and take advantage of another’s ignorance. Our courts have taken great strides since the days when the judicial emphasis was on rigid rules and ancient precedents. Modern concepts of justice and fair dealing have given our courts the opportunity and latitude to change legal precepts in order to conform to society’s needs. Thus, the tendency of the more recent cases has been to restrict rather than extend the doctrine of caveat emptor. The law appears to be working toward the ultimate conclusion that full disclosure of all material facts must be made whenever elementary fair conduct demands it.
Bottom line, in Florida, sellers of residential real estate have a duty to disclose most material information about the condition of the property (past and present) as well as repairs that have been done and repairs that need to be done (including things like termite damage, mold, Chinese drywall, leaky roofs, plumbing and electrical issues, structural damage, code violations, illegal additions, etc.). (Commercial real estate buyers traditionally do not get the same level of protection under Florida law. See the application of “caveat emptor” in Solorzano v. First Union Mortg. Corp.).
What Happens When Sellers Fail To Disclose in a Residential Real Estate Transaction?
When a buyer is not told about a material issue related to residential property in Florida, the buyer may have the right to rescind the deal and/or sue for money damages resulting from the failure to disclose (however, most standard form contracts now require most disputes to be mediated before litigation may commence – check your contract). This is true whether or not the failure to disclose was intentional or a mistake.
Additionally, Florida real estate lawyers see many “Errors & Omissions” claims on Real Estate Agent and Real Estate Broker’s insurance policies for being complicit in failing to disclose a defect or condition that is adjudged to be a material item.
Short answer: failures to disclose known material issues to residential real estate buyers in Florida often leads to lawsuits being filed. There are several statutory laws (both federal and state) that come into play here, along with Florida court cases (precedent). Environmental regulations established under federal law may even apply in Florida because of our unique natural resources and risks (e.g., the Everglades, Flooding, Mold, Hurricanes, etc.).
What Should You Do?
In any Florida residential real estate transaction, it’s a good idea to seek guidance before the contract is signed (both seller and buyer). Doing so, insures that disclosures will be made and questions will be asked and answered so that both sellers and buyers leave the closing table happy and fully informed, and allowing them to move forward without potential claims and litigation in the future.
To this end, many realtors use disclosure forms (such as this one) to overcome any disclosure concerns; however, in an instance where a “Buyer Waiver Of Claims’ provision is included in the contract, or there is a simple and short “Seller Disclosure” section in the contract, or where there may be a question or issue involving the disclosure of material information about Florida residential real estate, it is a good idea to seek guidance before the contract is signed or the deal is closed.
That’s because nobody wants to have to file a lawsuit, or defend against one, down the road. And, don’t let anyone tell you that you don’t need a lawyer or that a real estate form is “standard”. Use your good judgment. After all, you are spending a lot of money, so protect yourself.
Thus, a good piece of advice if you are buying or selling a home or condo and are worried about a disclosure issue, is to speak with an experienced Florida real estate lawyer to learn about your rights (hopefully, before you sign a contract or close the transaction). Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.
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