Nevadans are all too familiar with games of chance. But if you are buying a home in the Silver State, chance is thelast thing you want in your transaction. You want to know exactly what you are bargaining for, without undue risks or surprises. Unfortunately, buying a home is inherently risky. How can you be sure that it's worth what the seller is asking, so that it has a chance of increasing in value, not subjecting you to repair costs?
While predictions are never certain, Nevada does attempt to create some transparency in the real estate puchase and sale process. The state requires that, before actually making the transfer, the seller first give the buyer a lengthy disclosure statement. This is a written form that puts you on notice of any known defects with the home and property.
Defects might include something as small as a cracked window, or as significant as a large mold outbreak. These sorts of issues would materially affect the value or use of the property. What does Nevada law entitle you to know before you purchase a new home?
A state law that goes by the citation N.R.S. 113.130 covers disclosure requirements for home sellers in Nevada. This statute provides that, at least ten days before residential property is conveyed to the buyer, the seller must complete a disclosure form regarding the property. This disclosure is meant to cover all known material defects. Again, a material defect is a problem with the home that would seriously affect the property’s value, such as an unsteady foundation, for example; but not something as minor as a small dent in the garage door.
Unlike in some states, Nevada’s legislation does not specifically state what areas or aspects of the property require some sort of disclosure. The Nevada Real Estate Division (a state agency that monitors the real estate industry) offers a widely used four-page disclosure form containing all of the necessary information that the seller will likely use.
Different real estate agents and real estate attorneys may recommend different versions of the form. The form asks the seller to answer a series of questions about various elements of the home by checking a box for “Yes,” “No,” or “N/A” (not applicable). The disclosure asks about the condition of various aspects of the property, including: Systems/Appliances (such as plumbing and garbage disposal), Property Conditions (roof, renovations, flooding, and so on), and Environmental Conditions (such as radon, asbestos, and fungi).
Importantly, after the seller gives you the disclosure statement, you can rescind the purchase. Imagine, for example, that the seller gives you a disclosure statement stating that the air conditioning doesn’t work. Nevada gets hot! This is no small defect. You have the automatic right to back out of the transaction. You may use this as a negotiating point to haggle for a lower price or a credit in escrow to be put toward repairs, or you may simply find another home altogether. Or you have the option to ignore the red flag and move ahead with the sale. Either way, this choice is yours.
You should not rely purely on a seller’s disclosure statement when electing whether or not to purchase a home, whether in Nevada or anywhere. First of all, Nevada law specifically states that it “does not require a seller to disclose a defect in residential property of which the seller is not aware.” In other words, the seller has no obligation to hire an inspector to tell you whether the aging sewer pipes are about to spring a leak under the house or not. A seller who is unaware of a particular problem does not need to disclosure anything at all.
So, while seeing a lot of “No” or “N/A” responses on the Nevada Real Estate Division disclosure form might comfort you, remember that these responses might not mean very much. The seller can answer “No” as long as he or she is unaware of a particular problem.
Second, not all sellers are honest. There are nefarious sellers out there who might answer “No” or “N/A” to every single question in the hopes that you never discover that the seller is intentionally trying to mislead you. It is true that this would be considered fraudulent, and you might have causes of action (potential lawsuits) against the seller for this sort of misrepresentation. However, you do not want to get sucked into the possibility of time-consuming litigation after the sale when you discover the undisclosed defect.
The best preventive measure against these sorts of issues is to hire a home inspector to complete an independent investigation of the home. This sort of investigation would alert you to any defects in the structure’s condition. And while the inspector might refer to the disclosure statement, he or she would not take it at face value. Hiring an inspector is generally money well spent to protect the purchase of your new Nevada property.