Imagine that you buy a home in South Carolina, thinking it would be your dream home. But after you close on the transaction and move in, you begin to notice major problems. The bathroom in the basement has no running water. The kitchen appears to have mold under the sink. And the garage door doesn't close all the way.
After all that you paid for the property, you would now be on the hook to repair all of these undisclosed conditions. Fortunately, South Carolina’s legislature has established guidelines to protect you from these sorts of nasty surprises. Under state law, sellers must affirmatively disclose to you any known defects with the property. What sorts of disclosures should you expect before buying a South Carolina home?
Before you make any offers on a piece of residential property, you should familiarize yourself with South Carolina Code § 27-50-10 et seq., which governs required disclosures by sellers. Note that this legislation applies not just to direct sales of residential property, but also to leases of property with an option to purchase (for example, a one-year lease with a right-of-first-refusal option to buy at the end of the year).
According to South Carolina Code § 27-50-40, the seller must give the purchaser a written disclosure statement, delivered either electronically or by other, similar means. The statute requires that the disclosure statement include information on: (1) the water supply and sanitary sewage disposal system; (2) the roof, chimneys, floors, foundation, basement, and other structural components and modifications of these structural components; (3) the plumbing, electrical, heating, cooling, and other mechanical systems; (4) current or prior infestations of wood-destroying insects or organisms; (5) whether any zoning laws, building codes, boundary disputes, or easements affect the property; (6) the presence of lead-based paint, asbestos, radon gas, methane gas, or toxic material; and (7) whether there are any operable rental or lease agreements affecting the property.
What does this disclosure form actually look like, and what should you expect to receive from your seller? The South Carolina Real Estate Commission has devised a sample disclosure form that lays out all of this information. The five-page form asks 24 questions, which comprehensively cover all of the statute’s areas of concern. The seller is instructed to answer “Yes,” “No,” or “No Representation” to each of the questions.
the buyer, you should realize that there is a red flag if the seller answers either “Yes” or “No Representation” regarding a particular problem or defect.
Some buyers may wonder whether the seller is required to fill out this paperwork if you don’t want it. The answer is no. Interestingly, the statute does not apply when “both parties agree in writing not to complete a disclosure statement.” You may not care about a disclosure statement if, for example, you plan to knock down the existing home, or if you simply want to close on the transaction quickly.
This is the precise question on the mind of every nervous buyer. To what extent can you really trust that the seller has fully disclosed every issue with the property? The question actually contains two related questions: First, is the seller being honest? And second, if the seller is being honest, does that make the form complete?
Every seller has a natural incentive to make the property seem perfect, so as to fetch the highest possible price. While savvy sellers (perhaps after a talk with a real estate agent) understand that disclosing defects actually builds trust and may make no eventual difference to the purchase price, given that a wise buyer will conduct a home inspection and turn up most defects anyway, not all sellers are so forward thinking. Or, having lived with various problems for so long, they may think of them as no big deal.
This is a reminder that the best way to protect yourself in a home sale transaction is to hire your own independent inspector to examine the property, and not rely heavily on what the seller tells you in his or her disclosure form. A complete investigation of the home could turn up any undisclosed defects.
The second question is not about honesty, but rather about ignorance. What if the seller tries to disclose everything within his or her knowledge about the home’s problems, but genuinely does not know about all of them? Plenty can go wrong with a house that's hidden in the walls, attic, or basement, or buried in legal documents. South Carolina Code § 27-50-40 is very clear that “conditions of the property of which the owner has no actual or constructive knowledge” are not included in the disclosure statement. Therefore, it would be foolish for you to rely exclusively on the seller’s disclosure, since the seller is not under any obligation to hire an inspector to make sure that the statement is complete.