"Sweet Home Alabama" is a famous ballad for a reason. Alabamans love their home state. And if you are looking to purchase a home in Alabama, you will soon see why. But making sure that the home you buy is actually “sweet” may not be an easy task. Purchasers of residential real estate should always consider the possibility that defects exist in the home, which could impair its value. Defects might include something as small as a leaky faucet, or as large as an unstable foundation. These conditions can cause you great aggravation, not to mention great expense, long after the closing.
A home's current owners tend to be in the best position to tell you about these sorts of defective conditions. But does your Alabama seller have any legal requirement to tell you about such things? Most states have passed clear legislation that would require home sellers to give a written disclosure report of these sorts of defects to potential buyers. In the Heart of Dixie, however, sellers do not have these strict legislative requirements. There are, however, some regulations on what a seller must do. What sorts of disclosures should you expect from your seller, and what level of faith should you place in those disclosures?
Alabama lacks a detailed chapter of laws that would force a seller to give you a formal disclosure statement regarding known defects with the home. To the contrary, Alabama courts enforce caveat emptor clauses in purchase contracts. Under the doctrine of caveat emptor (“let the buyer beware”), judges will generally not compensate buyers for home defects found after the purchase.
This places the burden on you, as the home buyer, to perform an investigation before jumping into the sale. It also makes it easier for sellers to sell their homes “as is,” without worrying about legal liability after the sale.
Having said that, Ala. Code § 6-5-102 is slightly helpful to buyers. That statute provides: “Suppression of a material fact which the party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances of the case.”
Courts in Alabama are somewhat mixed in how they interpret this law, but generally speaking, it means that a seller must honestly respond to your questions about the property. For example, imagine that you write to your seller before closing and ask, “Does the refrigerator work?” She writes back and says, “Yes, absolutely! I just bought it last year. It’s state-of-the-art and in perfect condition!” If you move into the home and discover that the refrigerator is old and decrepit, you might be able to sue your seller for the cost of a new refrigerator under this statute.
Courts also interpret this statute to mean that the seller’s real estate agent must disclose any material defects to you about which the agent is aware. This relates to the “confidential relations of the parties.” In other words, imagine the seller says to his agent, “The roof leaks constantly. I can’t wait to sell this house!” The agent is then under a legal obligation to tell you and any prospective purchaser about this defect.
As you might imagine, however, it is difficult to enforce or prove such conversations. Nevertheless, the real estate agent could face action from the Alabama Real Estate Commission, which oversees the licensing of agents. Many agents would rather be honest than face losing their license.
Clearly, Alabama’s laws around disclosure are somewhat lacking compared to other states. Sellers’ obligations are limited. Neither sellers nor their real estate agents are required to carefully inspect the home from floor to ceiling and tell you about every little problem that they find before accepting your down payment. Therefore, you need to look out for yourself.
How can homebuyers like yourself protect your interests? First, you should hire a professional inspector to perform complete investigation of the home. The inspector can take into account any defects that the seller or the seller’s agent does mention during your open houses and visits, and he or she can go much further by visiting the property for an extensive period and searching for problems. This person will have your best interests at heart, and will report back to you if there is a problem about which you should be aware.
A good home inspection might cost some money upfront, but it can save you tens of thousands of dollars--plus stress and aggravation--down the road.
Another possibility is to negotiate for the seller to provide you a set of written disclosures, and for you to be satisfied with what you see there before you close the deal. A seller who wants the sale to close should be willing to provide such information. Your real estate agent or attorney can most likely provide a standard form for the seller to fill out.