Realtor® Attorney Joint Committee

What Must a Seller Disclose?

By: Kara J. Scott, Esq., Barnes Walker, Goethe, Perron, and Shea, PLLC

Although sellers of real estate may want to make their homes more appealing to receive a full price (or higher) offer as quickly as possible, Florida law requires full disclosure of known property defects to enable buyers to make informed decisions prior to submitting an offer.

Prior to 1986, the law in Florida was based on the doctrine of Caveat Emptor (“buyer beware”), which places the burden on a purchaser to inspect the property thoroughly for possible defects, as the seller was under no obligation to disclose. The landmark case of Johnson v. Davis (480 So.2d 625) (Fla. 1986) broke from the doctrine as it had been applied to residential real estate transactions, ruling that a seller of residential real property has a duty to disclose any “facts materially affecting the value of the property, which are not readily observable and are not known to the buyer …” (p.629).

Although not the subject of this article, it should be noted that the doctrine of Caveat Emptor is very much alive and well in commercial transactions where the parties are deemed to be sophisticated business people, and a purchaser is often granted a lengthy due diligence period to conduct various inspections and tests.

The Seller’s Property Disclosure created by Florida REALTORS® is an effective tool for assisting in the disclosure of material facts. The sellers, and not the real estate licensee, should complete the form with as much accurate information as they have, with as much detail as possible. Although the seller’s agent or broker should not complete the disclosure, Florida law imposes a duty on the licensee to disclose known defects as well. That being said, a 2021 case held that an agent or broker does not have a duty to investigate further where a defect is not known or readily observable (Busuttil v. Certified Home Inspections, LLC, et al. (Fla. 1st DCA, 2021).

Documents that transfer risk from one party to another, such as disclosures, waivers, and releases, must be entered into with complete knowledge and understanding of any risk as well as potential costs, effects, and ramifications. Therefore, for a disclosure to be effective in transferring risk to the buyer, the disclosure itself must be full and complete and should include the known risks, costs, and other ramifications of the defect. Never assume the buyer has considered the risks and costs involved when considering what to disclose. Additionally, the buyer must also be given the opportunity to avoid the risks and costs, which typically occur during the inspection period of the contract.

However, in a strong seller’s market, some buyers are waiving the inspection period altogether, or it is limited to an extremely short period of time. While it may be tempting for a seller to have little or no inspection period, a buyer could make the argument that they were not given the opportunity to avoid risks and costs, thereby exposing the seller to potential liability.

In addition to the Seller’s Property Disclosure, a number of the FR/BAR contract riders also include disclosure provisions: PACE Rider, Lead Paint Rider, Defective Drywall Rider, and the Coastal Control Line Disclosure, to name a few. Additionally, the Condominium Rider and Homeowner’s Association/ Community District Rider contain disclosure provisions relating to special assessments and should be carefully reviewed with the seller.

It is in the seller’s best interests to disclose as much as possible: if a seller has any questions or doubts about disclosure, please refer them to an attorney before they sign a binding contract. •

This article is meant for educational purposes only. It is not intended to serve as legal advice and should not be used as a substitute for consultation with an attorney.