For most Mississippians, buying a home is one of the most significant financial decisions they will ever make. All buyers want to be secure in their purchases. If you are considering purchasing a home, you want to be sure of the quality of the property. Do the lights work? Are there leaks in the slab? What about the shower plumbing? Mississippi requires sellers to make disclosures of any known defects to potential buyers. You should know what the seller’s disclosure obligations are, and what questions you may want to press.
Disclosures in Mississippi are governed by M.S. Code § 89-1-501 et seq. That statute provides that the seller of any residential property “shall deliver to the prospective [buyer] a written statement required [herein]… as soon as practicable before transfer of title.” Obviously, the public policy purpose of this statute is to require sellers to provide relevant information about the property and articulate any facts about which he or she is aware that negatively affect its value.
The timing of the disclosure is also specified by statute. M.S. Code § 89-1-503 says that if the seller makes any disclosure after the buyer makes a formal offer of purchase, the buyer shall have three days after receiving the disclosure in person or five days after it’s delivered by mail to terminate the purchase offer. For example, if you make a written offer on a house, but then the seller delays in giving you a disclosure statement, you automatically have a chance to reevaluate the offer at that time.
What sort of form should you expect from the seller? The Mississippi Real Estate Commission (MREC)—a state agency charged with oversight of the real estate industry—provides a disclosure form that contains all of the necessary information. (Be sure that this is the form that your seller uses, or if not, a form that contains substantially the same information. Be wary, for example, of a disclosure form drafted by the seller’s attorney that omits certain questions or topics.)
MREC’s disclosure form is short, but covers the areas of the property that you will be most interested in. It is divided into 13 sections, which ask specific questions about different areas of the home. The questions cover everything from legal issues (are there any easements on the property?) to structural issues (has there been any remodeling since you moved into the home?).
Within each section, the seller must respond by checking “Yes,” “No,” or “Unknown.” The seller can also attach an additional page with lengthier responses.
Do not assume that the disclosure statement is a comprehensive picture of all of the defects in the home. Importantly,M.S. Code § 89-1-507 provides that, if some information that is “required to be disclosed is unknown or not available” to the seller, and the seller has made some “reasonable effort to ascertain it,” the seller can simply include a reasonable approximation in the statement. For example, if the seller believes that the water system works, he or she need not perform any sort of investigation or hire an inspector to make sure. Indeed, the seller has a fairly minimal burden.
Moreover, Mississippi’s legislation specifically excludes some information from mandatory disclosure. According to M.S. Code § 89-1-527, the seller does not need to disclose the fact or suspicion that the property was the site of a death, homicide, or suicide. The same is true if the property was occupied by someone with a noncommunicable disease, such as HIV or AIDS. Because these facts do not actually have any real affect on the property, the seller is not required to disclose them to you.
There is an old expression in foreign policy: trust but verify. Sellers do have an incentive to make the property look as attractive as possible. But sophisticated sellers—especially those with attorneys—will know that Mississippi law is strict about the requirement for honesty. M.S. Code § 89-1-523 notes that if a seller “willfully or negligently violates or fails to perform any duty [in this Act]… he shall be liable in the amount of actual damages suffered by a transferee.”
The Mississippi legislature does not want the seller to play games. Moreover, M.S. Code § 89-1-511 requires that every disclosure be made in good faith. The statute defines good faith as “honesty in fact in the conduct of the transaction.” Thus, the Magnolia State gives the seller important motivations to be honest with you in making disclosures; the seller will naturally be afraid of a lawsuit!
Having said this, there is no substitute for hiring a professional home inspector. Even assuming your seller is honest, and discloses every defect he or she knows about the property, the seller simply might not know about all of the defects. Some defects are hard to see, such as the presence of radon gas, asbestos, or hidden structural issues. A good inspector would find these sorts of problems and advise you before the closing. In short, the seller’s disclosure statement is a starting point—but not an ending point.