So you are selling your Georgia home -- maybe you just got a job across the country, or maybe you have a baby on the way and need more room, or maybe the home is poorly built, on shifting ground, and you just want to be rid of it! You have a few curious lookers peppering you with questions about the home, and now your listing agent is asking you to fill out something called a “Seller Property Disclosure Statement.” How much information must you disclose about the property to potential buyers?
Sellers’ Required Disclosures in Georgia
Although Georgia law does not require a seller to fill out a specific disclosure form, the law does require a seller to inform a buyer about any known material (important) defects in the condition of the home. There's an exception if the defect would be discovered by the buyer upon a reasonable inspection, but that's meant to cover fairly obvious things – for example, you don't need to point out, "the porch roof has collapsed," if anyone looking at the property can see that the porch roof has collapsed.
The Georgia seller must also honestly answer a buyer’s questions about the home. Buyers might ask about anything from what repairs you've done in the past to how your dealings with the neighbors have been. Attempting to obfuscate can lead to lawsuits later, so it's best to be honest and open.
Again, however, you are not supposed to wait for questions if a defect is "material" and not readily visible. Georgia courts have generally held that a defect is “material” if the buyer would consider it material; that is, if known to a prospective buyer, it would cause that person to not buy the property, or to pay less for it -– such as, for instance, the fact that it was built on unstable ground.
As a general rule, in order to prevent later accusations of misrepresentation or fraud from a buyer, as a seller in Georgia you should be upfront, answer the buyer’s questions, and tell the buyer about any problems you are aware of regarding the condition of the home (most likely by filling out the optional standard form described below).
What a Georgia Seller Does Not Need to Disclose
Even though, as a Georgia seller, you generally must disclose known problems with the condition of your home, there are certain specific exceptions under the Georgia statutes. These relate to things that occurred in the home, not the home’s physical condition.
A Georgia seller does not need to inform a buyer if any diseased person ever lived in the home, or if a homicide, felony, suicide, or any other death occurred there (Georgia Official Code Annotated §44-1-16(a)(1)). Additionally, it is up to the buyer to investigate certain information about the neighborhood where the home is located. Georgia statutes specifically state that a seller is not required to inform the buyer if a registered sex offender lives in the area (Georgia Official Code Annotated §44-1-16 (b)). (However, to help the buyer, most form real estate contracts used in Georgia direct a buyer where to look online for information about the location of registered sex offenders.)
Even if the seller is not required to disclose an event on the property such as a murder, a seller still must answer any direct question from a buyer honestly (Georgia Official Code Annotated §44-1-16(a)(1)). So, if the buyer (who may very well do a Google search on your home's address) asks you whether your home was where the gang member was murdered last summer, you do need to answer honestly.
The only time you do not need to answer a buyer’s question completely and honestly is if it is a question relating to information protected under the Federal Fair Housing Act or Georgia’s fair housing laws (Georgia Official Code Annotated §44-1-16 (a)(2)).
The Federal Fair Housing Act (found at 42 United States Code, Sections 3601-3619 and 363), and the Georgia’s fair housing laws (found in the Georgia Official Code Annotated, Sections 8-3-200 through 8-3-223), protect people from housing discrimination based on race, color, religion, sex, national origin, familial status, and handicap. If, for example, a buyer asks about the previous occupant’s religion, or whether a person with AIDS (considered a handicap under the Fair Housing Act) ever lived in the home, this is protected information you should not give out. You should instead reply that you are not legally allowed to answer.
Seller’s Federal Disclosure Requirements
In addition to Georgia’s requirement that a seller must disclose any known defects in the home to a buyer, federal law has additional disclosure requirements. If you are selling a home built prior to 1978, before entering into a purchase and sale agreement you must disclose to the buyer any known lead-based paint hazards in the home. Under these requirements (found at 42 U.S.C.A., Sections 4851 through 56), you must:
- provide buyers with a copy of any inspection report relating to lead-based paint hazards in the home
- give an EPA-approved informational pamphlet to buyers
- give buyers an option to conduct a lead based paint inspection or assessment, and
- include specific warning language relating to lead-based paint hazards in the purchase and sale agreement.
Seller’s Liability for the Failure to Disclose
What happens if a seller does not make the necessary disclosures? For example, what are the buyers’ rights if they move in, the foundation of the home moves, the walls crack, and you hadn’t informed them about that shifting ground under the home?
Since you failed to disclose important known facts about the condition of the house, the buyer may have a cause of action against you for fraud, misrepresentation, or breach of contract. If successful, the buyer may be entitled to rescind the contract (with rescission, the court attempts to put the parties involved back in the positions they were in prior to entering into the contract – so, for example, you’d be required to reimburse the buyer the price of the home plus expenses and you’d get the home back). Or, the buyer might elect to receive damages, in which case, the buyer keeps the home, but you’d be required to compensate the buyer for its reduced value because of the defect, or pay the costs of repairing the defect).
Seller Disclosure Statement in Georgia
To help avoid the possibility of a disgruntled buyer bringing a time-consuming, expensive lawsuit against you in the Georgia courts, as a home seller you should make sure the prospective buyer is fully informed about the condition of the property. Using a disclosure statement is a good way to do this.
As noted in the beginning of this article, your real estate agent may have requested that you fill out a seller’s disclosure statement for your home. Usually a real estate agent will use the “Seller’s Property Disclosure Statement” form prepared by the Georgia Association of REALTORS®. Most real estate agents attach this form as an exhibit to the purchase and sale agreement. The disclosure is fairly detailed and asks for information on the condition of such things as the roof, plumbing, boundaries, heating and air conditioning systems, and other items.
The disclosure statement is useful to assist you in reviewing what you know about the condition of your home, item by item. The process of filling it out may even bring to your mind other issues you should disclose to a buyer. Although you are not legally required to fill out the form, providing a buyer with the completed statement, or a similar disclosure statement, is a good way to make sure you are making the disclosures legally required of you as a seller.
If you have concerns about what you need to disclose about your home, or other questions about your sale, discuss them with your listing agent or contact a real estate professional or an attorney in your area for help. Hopefully, once all required disclosures are provided, the buyer will be satisfied with the condition of the home, at the price you are offering it, and a successful sale will result.