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Ask Eli: Caveat Emptor — Let The Buyer Beware!

by ARLnow.com Sponsor December 6, 2016 at 12:00 pm 0

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This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: What responsibility does a seller have to disclosure problems with their home or the surrounding community?

Answer: Sellers cannot lie about or conceal material defects of their home, but in Virginia, property owners are under no responsibility to disclose them to a buyer. That’s because Virginia is one of the few states in the US still operating under the common law concept of Caveat Emptor, meaning “Let The Buyer Beware.” This places the duty of discovery (of defects) on the homebuyer.

Residential Property Disclosure

The Residential Property Disclosure is required in most transactions with the exception of sales between relatives, foreclosures, builders and a handful of other scenarios. The Disclosure, signed by the seller and buyer, states that the homeowner(s) makes no representations or warranties with respect to things like:

  • Property Condition
  • Sexual Offenders
  • Adjacent Parcels
  • Wastewater Systems
  • Historic Districts

Alternatively, jurisdictions like Washington DC require extensive disclosures by homeowners. The DC Disclosure runs 4+ pages long and requires owners to make representations on every material aspect of the property and community including roof, insulation, heating/cooling, appliances, drainage, zoning and more.

REALTORS Held To A Higher Standard

While Virginia homeowners aren’t required to disclose defects, the REALTOR Code of Ethics holds us to a higher standard. A listing agent who is a REALTOR “shall disclose to prospective buyers/tenants (customers) all material adverse facts pertaining to the physical condition of the property which are actually known by the licensee.” While listing agents don’t have a duty to discover latent defects, they are required to communicate anything they’re made aware of through the standard course of the transaction be it discussions with the seller, inspection of the property or otherwise.

Protecting Yourself

Sellers are well protected by Virginia law and buyers are made to do their homework on every purchase. In most cases, buyers don’t have the luxury of a lengthy discovery period prior to buying a home, so what are some ways buyers can reduce their risk?

  • Hire a great home inspector. A good home inspector is one of the most important relationships your real estate agent should have. While inspectors cannot pry up floorboards and open walls to inspect every bone of a house, a great inspector knows the signs of expensive defects in plumbing, foundation, water intrusion, etc.
  • Talk to your future neighbors. Visit the neighborhood without your agent and knock on some doors if you can’t find any neighbors outside. Start the conversation off with general questions about what it’s like living in the community and gradually move into questions about the home, if there are any noise/traffic issues, etc.
  • Ask direct questions of the seller if there are any red flags. Remember, sellers cannot lie, so if you find a wet spot in the basement, ask if they’ve ever dealt with plumbing issues or water intrusion in the basement.
  • Work with a local expert. We are responsible for disclosing material facts about the purchase beyond the physical home itself, meaning any relevant information about the community that impacts your decision to purchase. It takes a local expert, somebody who follows the community closely, to know if there are any material concerns.

Personally, I’d like to see Virginia make changes to the seller disclosure laws to balance the scales a bit. One could make a case that increasing disclosure requirements would reduce buyer risk, thereby making Virginia homes more valuable and pushing home values up across the board (sellers would still have the ability to offer “As-Is”). As a counter point, buyers in jurisdictions with heavy disclosure requirements can rely too much on what the seller says/does not say and fall victim to a seller simply not being aware of a defect that a buyer could have discovered through due diligence. What do you think? Are you happy with the current system or would you like to see Virginia get rid of Caveat Emptor and place more duty on the seller to disclose material defects?

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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