So you are planning to sell your Georgia home. Perhaps you already have a few curious lookers peppering you with questions, 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? And will you scare them off if you reveal every detail?
Although Georgia's statutes do not require sellers to fill out a disclosure form, Georgia courts have stated that home sellers must inform buyer about any latent or 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 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).
Even though, as a Georgia seller, you must disclose known problems with the condition of your home, there are exceptions under the Georgia statutes. These relate to things that occurred in the home, not the home’s physical condition.
A Georgia seller can not be sued for failing to inform a buyer that a person living in or who has lived in the home has or had a disease that medical evidence shows is highly unlikely to be transmitted through occupancy. (Georgia Official Code Annotated §44-1-16(a)(1)).
Nor can a Georgia seller be sued for failing to tell a buyer that a homicide, felony, suicide, or other death occurred there (Georgia Official Code Annotated §44-1-16(a)(1)).
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 questions from a buyer honestly (Georgia Official Code Annotated §44-1-16(a)(1)). So, if the buyer (who might 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 U.S. 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.
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. Code, Sections 4851 through 56), you must:
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 might have a cause of action against you for fraud, misrepresentation, or breach of contract. If successful, the buyer could 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).
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 might 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.