Selling a South Carolina Home: What Are My Disclosure Obligations?

Guidance on what residential real estate sellers must tell prospective home buyers when selling a house in South Carolina.

Before you can form a real estate contract with a potential buyer for your South Carolina home, state law requires that you give that buyer a “disclosure statement.” A disclosure statement is a document that tells the buyer about any known defects in your home and property. Defects come in all shapes and sizes. A “defect” might include an unpaid lien on your property from a contractor, or a broken water pump in the basement. What defects have in common is that they lower the value or attractiveness of the property. This is information a buyer would want. And the legislators in Columbia require you to give it to them.

Real Estate Disclosure Law in South Carolina

You can have a look at the state law that governs disclosures by sellers like yourself; it's at  South Carolina Code § 27-50-10 et seq.  The statute applies not just to direct sales of residential property, but also to leases of property with an option to purchase (for example, if you lease your property to your neighbor for three years, and include in the contract a clause that after three years, the tenant has the right of first refusal to buy the land).

Interestingly, the statute does  not  apply when “both parties agree in writing not to complete a disclosure statement.” In other words, if you and the buyer agree that no disclosure statement is required, and specifically state that in the purchase contract, South Carolina law will not force you to submit one.

According to  South Carolina Code § 27-50-40, you must “shall furnish to a purchaser a written disclosure statement” and it may be “delivered electronically through the Internet or other similar methods.” (In other words, you can simply email it to the buyer, or have your agent email it to them.)

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) information about 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 on the property.

The South Carolina Real Estate Commission has created a  sample disclosure form  that lays out all of this information. The five-page form asks 24 questions that comprehensively cover all of the statute’s areas of concern. You must answer “Yes,” “No,” or “No Representation” to each of the questions. If you answer “Yes,” you are encouraged to attach an additional page to explain the defect at issue. And if you answer “No Representation,” remember that this will be a ‘red flag’ to the buyer that he or she should check out that particular aspect of the home before closing.

You must also be proactive when considering whether to enter any information in the various "other" clauses, for example "other land use restrictions" and "other appliances." These are a clear indication that (per the statute) you are not meant to hide behind any failure of the form to ask the precise question that applies to your property, but are expected to tell the buyer about any and all material defects.

Your responsibility for accurate disclosures does not end once you hand the buyer the form. According to  South Carolina Code § 27-50-60, if you disclosure an inaccuracy or additional defect requiring disclosure, “the owner shall correct promptly the inaccuracy by delivering a corrected disclosure statement to the purchaser or make reasonable repairs necessitated by the occurrence before closing.”

Study each of these disclosures carefully before answering, and check with your real estate agent or attorney if you are uncertain how to answer.

Do I Need to Have My Home Inspected Before Filling Out the Disclosure?

The answer is: No!  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. If you do not know of a problem with the electrical generator, for example, you do not need to hire a mechanical engineer to come inspect the generator before you give the buyer the disclosure statement.

It is very likely that the buyer will want a home inspection to be performed to verify whatever is contained in your disclosure statement, but that cost and expense doesn’t fall on your shoulders. Indeed, the South Carolina Real Estate Commission’s disclosure form specifically encourages this, and so does  South Carolina Code § 27-50-80, which states that “This [law] does not limit the obligation of the purchaser to inspect the physical condition of the property and improvements that are the subject of a contract covered by this article.”

Why Should You Be Open Honest In Making Disclosures About Your South Carolina Home?

The first reason to be honest is that, given the likelihood that the buyer will conduct an inspection, you may only be postponing the inevitable and undermining the buyer's trust in you if you attempt to hide a property defect.

What's more, South Carolina’s legislators have created some incentives for you to be both honest and thorough in making your disclosures before you sell.  South Carolina Code § 27-50-65  states that “An owner who knowingly violates or… discloses any material information on the disclosure statement that he knows to be false, incomplete, or misleading is liable for actual damages proximately caused to the purchaser and court costs. The court may award reasonable attorney fees incurred by the prevailing party.”

This might sound like legalese, but it boils down to this: If you fail to disclose a known material defect about your property, or give a disclosure that is misleading, the buyer can later sue you for the costs to remedy the problem (which is likely to surface eventually). Moreover, the court can award the buyer all court costs and attorneys’ fees required to bring the lawsuit. So, you might end up paying for the costs of remediation  and  the costs of getting sued!

The good news is that this is a two-sided coin: If you  do  disclose a known defect, the buyer cannot turn around months after the transaction has closed and sue you over the defects in your home. The disclosure form will insulate you from this sort of liability, which could otherwise cause legal fees and headaches long after you wish that you could move on.

So, while it might be true that giving the buyer a misleading disclosure statement could (if the buyer doesn't bring in a qualified home inspector) fetch you a higher sale price, and maybe even result in a quicker sale, it could also cause you problems down the road. If you’re selling your South Carolina home, the wisest strategy is to follow the letter and spirit of the law and provide a comprehensive disclosure.

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