Selling a Mississippi Home: What Are My Disclosure Obligations?

Selling a residential home in Mississippi, or anywhere, involves multiple steps. You must interview prospective real estate agents, clean, declutter, and paint, review purchase offers, and so on. And your legislators in Jackson have added a step, by requiring you to fill out a Property Condition Disclosure Act, by which you'll make certain disclosures to prospective purchasers about known physical defects on the property. Is this a hassle, or a benefit to all concerned? And if preparing to sell your Mississippi home, what exactly must you disclose to prospective buyers, and how?

Real Estate Disclosure Law in Mississippi

In Mississippi, disclosures are governed by Miss. Code § 89-1-501 et seq. That statute says that the seller of any residential property must deliver to prospective buyers a written disclosure statement as soon as practicable before transfer of title.

The purpose is to compel you, the home seller, to provide relevant information about the property and articulate any facts of which you are aware that negatively affect its value. This could cover a variety of home defects, as discussed below. The legislature's broader goal, of course, is to prevent the buyer from encountering nasty surprises after moving into the home.

The timing of the disclosure is important. Miss. 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 offer. So, for instance, if a buyer makes you a written offer for your house, and you take your time delivering a formal disclosure statement, or happen to disclose at some point that the electrical systems don't work, that buyer automatically has a chance to reevaluate the offer at that time.

The Mississippi Real Estate Commission (MREC), a state agency charged with oversight of the real estate industry, provides a disclosure form for your use.

What Issues or Defects Does the Mississippi Disclosure Cover?

MREC's disclosure form is relatively short, but covers the areas of your property that a buyer will be most interested in. The questions you'll need to answer cover everything from legal issues, such as whether there exist any easements or rights of way on the property, to structural issues, such as whether there has been roof leakage, soil collapse, or any remodeling done since you moved into the home. Pests, appliances, and contaminants are also among the many covered issues.

Within each section, you are asked to respond by checking "Yes," "No," or in some cases, "Unknown." You always have the option to explain your answers in the space provided, or can attach an additional page. Sometimes, an explanation can help reassure sellers that a particular issue is not an enormous one, perhaps by giving some history (for example, that you had a particular plumber come to your home three years ago to fix a water pump, and it is now working).

Do not be afraid to check "Unknown." Mississippi does not expect that you know every detail about every inch of your home. Miss. Code § 89-1-507 provides that, if some information that is required to be disclosed is "unknown or not available" to you, and you have made some "reasonable effort to ascertain it," you can simply include a reasonable approximation in your statement. This is another way of saying that you should, for instance, make an effort to see whether your lights turn on, but need not hire an electrical engineer to perform a full inspection of your electrical system.

What Issues or Defects Does Mississippi Law Omit From the Disclosure Requirements?

There are a few facts that you are not required to disclose.

According to Miss. Code § 89-1-527, the fact or suspicion that the party was the site of a death, homicide, or suicide does not count as a "material fact" requiring disclosure. The same is true if the property was occupied by someone with a disease such as HIV or AIDS.

As the statute says, "failure to disclose such nonmaterial facts or suspicions shall not give rise to a criminal, civil or administrative action against the owner of such real property, a licensed real estate broker or any affiliated licensee of the broker." Because these facts do not actually have any real effect on the property, or the health and safety of its occupants, you are not forced to disclose them to buyers and stoke unnecessary fears.

You cannot, however, lie if a buyer asks about them directly, but should instead decline to answer.

Federal Law Requiring Disclosures of Lead Presence in Older Homes

If your house was constructed before 1978, federal law adds one more requirement concerning the information you provide prospective buyers.

The Residential Lead Based Paint Hazard Reduction Act (42 U.S. Code § 4852d), often called Title X, requires you to make disclosures, provide an informational pamphlet, and allow buyers to conduct their own tests. This is aimed at reducing the risk of lead poisoning in houses, given that most houses constructed before 1978 contain some source of lead, be it in the paint or pipes. Learn more in Seller Responsibility to Disclose Lead-Based Paint Hazards.

Why Should You Be Open and Honest in Making Disclosures?

Most likely, your property is your single biggest asset. Understandably, you want to sell it as quickly as possible. On first glance, disclosing defects might seem like a significant burden.

Nevertheless, there are several reasons to be open and honest here. First, Miss. Code § 89-1-523 notes that a seller who willfully or negligently violates or fails to perform the disclosure duty shall be liable to pay any actual damages suffered by the home buyer. The legislature does not want you to play games. Indeed, Miss. Code § 89-1-511 requires that disclosures be made in good faith, defined as "honesty in fact in the conduct of the transaction."

Here's an example of why this is practically important: Imagine that you purposely fail to mention that there is no hot water on the second floor of your home, afraid that this might dissuade the buyer. The buyer closes on the home, moves in, and quickly discovers the problem. The buyer will be angry, not just because you clearly omitted this detail from the disclosure, but also because he or she must now pay for an expensive repair. A buyer who becomes this angry is likely to sue.

The good news is that making disclosures can solve these problems. First, it can increase trust with the buyer at a crucial point before the closing of the sale. Second, if you disclose a known defect, the purchaser cannot turn around months after the transaction has closed and sue you for fraud, misrepresentation, or breach of contract. After all, the form gave full notice of the defect beforehand.

In short, Mississippi's statute incentivizes you to make full and frank disclosures to your buyer. Doing so is likely to save you headaches down the line.