What is considered a material fact?
A material fact should be considered anything about a property that would affect a persons opinion about a property. If it would change their mind about value or their decision to purchase the property. The policy of Orson Hill Realty is disclose, disclose, disclose. It is much better to tell someone up front than it is for them to find out later there is an issue. A material fact is something that a buyer or inspector wouldn’t necessarily see while viewing the property. For example if the foundation is cracking under the new carpet you put in the basement then that needs to be disclosed. You would be required to disclose this fact or possibly suffer the legal or financial repercussions of not disclosing this up front.
There are a few ways to do this disclosure. Again the sooner the better. The seller’s property disclosure is the best place to disclose this. This is required for residential listings (except for bank owned properties and builder properties). A seller’s property disclosure is a legal document that is basically the sworn and signed history of know issues or non-issues of a property. It is very detailed and is filled out at the time a listing goes on the market and is updated when a property goes under contract. It is the time that is best for a seller to disclose any issues with the property no matter how big or small. Another way that isn’t really recommended except if the issue happens or becomes apparent after going under contract is to do it in writing in the form of an amendment to the contract. The reason this method isn’t nearly as desirable is that once you start getting into days or weeks into the contract, after you have had negotiations over price and then inspections the “honeymoon period” is usually over. The more time that passes into a contract the mood usually changes. Sometime buyers are even getting remorse and looking for an easy out.
There are certainly times where a seller lives in a home and has no idea there is a major issue in the property. This just happens and there really isn’t much you can do. The moral of this article is to disclose, disclose, disclose!! That is Orson Hill Realty’s policy. We would rather not take a listing if the seller refuses to disclose material facts to buyers.
If someone dies in my home do I need to disclose that?
Every state has different laws on this and both sides of the argument actually make sense. In the state of Colorado you do not need to disclose this to potential buyers. Many other states you do and this is considered a material fact. The argument on the side of not needing to disclose this is simple. There is a very good chance that if a home is 100 years old that perhaps 50 years ago Uncle Bob was over for a Thanksgiving dinner and he wasn’t feeling well and went into the guest bedroom for a nap. Well Uncle Bob never woke up. Does that really affect the value of a home? I would argue not. On the flip side Just 2 years ago Uncle Bob comes over for Thanksgiving dinner and he hadn’t taken his anti-psychotic meds and goes postal on the entire family. Well I don’t think I would want to live in that home because of the stigmatization of that property. The best solution for this would be to do a google search on the property address to see if there are any news articles on that property.