Posted on 07/09/2018 at 11:19 AM by Joseph Borg
Buying a home is the most significant purchase most people will make in their lifetimes. Because of its importance, the Iowa legislature removed the old adage “buyer beware” by enacting a seller’s disclosure law several years ago in Iowa Code chapter 558A. Aside from a few exceptions, all sellers of residential property in Iowa must now complete a written disclosure statement which includes information regarding the condition and important characteristics of the property and the structures located on the property. The information provided in the disclosure statement must also include any significant defects in the structural integrity of the structures on the property. While many sellers have a tendency to rush through the completion of the disclosure statement, there are significant consequences to sellers who fail to disclose known defects, or who do not exercise ordinary care in completing the statement.
Sellers who have actual knowledge of a problem and fail to disclose it to the buyers, or who fail to exercise ordinary care in completing the disclosure statement are liable to the buyers for the amount of actual damages suffered by the buyers. All information must be disclosed in good faith, and based on current Iowa case law, the disclosure requirements are not limited to active problems. Sellers also have a duty to amend the disclosure statement if the information previously disclosed becomes inaccurate or misleading prior to closing. Thus, if something happens after the purchase agreement is executed but prior to closing, the sellers have a duty to amend the disclosure statement. The bottom line is that as a seller of residential property, it is best to overdisclose than to underdisclose.
While it may seem inconvenient to take some extra time to complete the seller’s disclosure statement, that minimal inconvenience is a much smaller price to pay than to be brought into court years after the sale. The full and accurate completion of the seller’s disclosure statement is a “big deal” and should be treated as such.
The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.
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