Selling an Oklahoma Home: What Are My Disclosure Obligations?

Guidance for home sellers in Oklahoma concerning that state's law on disclosures to buyers about the home's condition.

Oklahoma, as the song goes, where the wind comes sweepin' down the plain, is experiencing a rebound in its housing market. If you are looking to sell your home, state law requires you to make certain disclosures about the home’s condition. The purpose of these disclosures is to make sure that the buyer gets the benefit of the deal, and also that you do not face liability down the line. If you’re selling your Oklahoma home, what must you disclose to prospective buyers?

Disclosure Laws in Oklahoma for Home Sales

As a seller, you should familiarize yourself with  60 Okla. Stat. § 833, also known as the Residential Property Condition Disclosure Act. The statute provides that “A seller of property located in this state shall deliver… to the purchaser” either a “disclaimer statement” or a “property condition disclosure statement.”

The broad purpose of the legislation is to ensure that a potential buyer is aware of any defects in the property before buying it. Oklahoma’s Real Estate Commission (the state agency charged with oversight of real estate transactions) defines a “defect” as any “condition, malfunction, or problem that would have a materially adverse effect on the monetary value of the property, or that would impair the health or safety of future occupants of the property.”

If you choose to provide a disclaimer statement, you must acknowledge that you have “never occupied the property” and have “no actual knowledge of any defect” in the property. You might, for example, use a disclosure statement if you bought a parcel of land or home purely as an investment or inherited it, but don’t know the property intimately enough to be able to identify any physical issues one way or the other. A disclaimer puts the buyer on notice that it is his or her responsibility to conduct a thorough inspection. Oklahoma’s Real Estate Commission offers a simple, one-page  Disclaimer Statement  on its website. Both you and the buyer must sign the form, acknowledging that you have given it and that the buyer has received it (and you should each retain a copy!).

Most sellers of real estate, however,  have  lived on the property. In that case, you must fill out a  Disclosure Statement(also written by Oklahoma’s Real Estate Commission).

The disclosure statute is very specific about what information must be included on the form, specifically whether the following items are “in good working order” to the extent of the seller’s knowledge: (a) water and sewer systems; (b) structural systems, including the roof, walls, floors, foundation and any basement; (c) plumbing, electrical, heating and air conditioning systems; (d) the presence of any infestation or damage of wood-destroying organisms (i.e. termites); (e) major fire or tornado damage; whether there is any land fill on the property; (f) whether there is hazardous or regulated materials and other conditions having an environmental impact (i.e. asbestos) on the property; (h) whether the seller is aware of any “prior manufacturing of methamphetamine” on the property; and finally (i) whether there are any other defects within the seller’s knowledge.

What If I'm Unsure About Whether a Particular Defect Exists in My Oklahoma Home?

Not every homeowner knows every inch of his or her Oklahoma home. You might think things are working that are not, or you might simply never use certain features. Fortunately, the disclosure form is very clear that you must only disclose information within your own knowledge. Indeed, at the bottom of the form, it says in bold, capitalized letters that the information contained in the form is only based on “seller’s CURRENT ACTUAL KNOWLEDGE of the property.”

For each question, you have the option to simply state that you don’t know the answer. This is perfectly acceptable, if it's true. The form asks specific questions about various aspects of your home. For each, you’ll be asked to state whether it is “Working,” “Not Working,” “Do Not Know if Working,” or “Not Applicable/Not Included.”

Obviously, you should never say that you know something is working if you do not actually know; simply check the box for “Do Not Know.” And if a certain feature isn’t included in the house (for example, there is no microwave oven) you can check that last box for “Not Applicable/Not Included.” This disclosure statement is fairly comprehensive, covering most areas that would be of interest to an average buyer.

Note that the form also includes more bold language that is protective of you as the seller: “The declarations and information contained in this disclosure statement are not warranties, express or implied of any kind, and are not a substitute for any inspections or warranties the purchaser may wish to obtain.” In other words, even though the law requires you to make these disclosures honestly, the form reminds the buyer that it is ultimately his or her responsibility to pay for a home inspector (if the buyer wants one).

Why Should You Be Honest and Open in Making Disclosures About Your Oklahoma Home?

As you can see on the form and in the statute itself, Oklahoma makes it very clear to the buyer that the disclosure is merely for convenience, and that the buyer should still hire a home inspector. Nevertheless, you can face angry buyers and possibly litigation if you fail to disclose a defect about which you had actual knowledge.

Imagine, for example, that you had significant problems with the electrical system. You know that the wires are old, and that the backup generator outside is shot. At the moment you sign the disclosure form, everything is mostly working.

But the home inspector may spot the problems, and alert the buyer to the fact that you couldn't possibly have been ignorant of them. Suddenly you're attempting to close a purchase with a buyer who has lost trust in you, and who perhaps wants a major price reduction in light of this "new" information.

Or perhaps after the buyer moves in, the lights fail to turn on. The power flickers on and off. The buyer hires an electrical engineer, and realizes that it will cost a fortune to upgrade the electrical system, which has clearly been malfunctioning for some time. She sues you for breach of contract and fraud, trying to cover the costs of remediation.

An honest disclosure would have saved you from the buyer’s understandable surprise, anger, and frustration. It also would have saved you from a lawsuit.

While failing to make honest disclosures might save you some trouble in the short term and result in a quicker sale, there is a potential for much greater trouble down the road. The better strategy is to be fully frank and honest in your disclosures, so that both you and the buyer get the benefit of the bargain--and closure once it’s done.

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