Utah Home Sellers: Disclosures Required Under State Law

Selling a home involves a large amount of paperwork, and once the transaction closes, it's a relief all around. For a sale to close properly in Utah, the seller must, by law, disclose certain facts about the home's condition (physical and more) to the prospective buyer. No seller wants to face legal repercussions for failing to comply with the law on disclosing property defects. The following will explain how to avoid liability for inadequate disclosures when selling your Utah home.

Federally Required Home Seller Disclosures

First off, realize that federal law requires sellers of homes across the United States, in cases where the home was constructed prior to 1978, to advise buyers of the potential existence of lead-based paint there. (See 42 U.S.C. § 4851 et. seq.) Go to the Protect Your Family from Lead in Your Home page of the EPA website for a copy of the brochure that you must give buyers in these circumstances.

Statutorily Required Seller Disclosures in Utah

The only disclosure explicitly required by Utah's statutory law is that property sellers tell prospective buyers whether there has been contamination due to "use, storage, or manufacture of methamphetamines" in the home. (See Utah Code. § 57-27-201.)

However, the Utah Supreme Court has ruled that property sellers must disclose known material defects that could not have been discovered by a reasonable inspection by an ordinary prudent buyer. (See Mitchell v. Christensen, 2001 UT 80, 31 P.3d 572.) Material means something that could adversely affect its use or value. Accordingly, Utah sellers now commonly provide much more information to buyers, as described below.

Utah Code. 57-§ 57-1-1 outlines the disclosures that sellers do NOT have to make. A seller does not have to disclose that a home was the location of a homicide, a suicide, a decontaminated methamphetamine lab, or residence by a person with a disease such as AIDS that the Utah Department of Health has determined cannot be transferred by occupancy of a dwelling place. In addition, Utah Code. § 57-1-37 says that a homeowner need not disclose that the property being sold is "stigmatized" (meaning it has a bad reputation, usually because of a major crime, haunting, or something similar).

If the prospective buyer asks a direct question about one of the above issues, however, you cannot lie. Your better bet is to explain that you choose not to answer, per the Utah statute.

Disclosures Made by Utah Home Sellers to Avoid Legal Liability

Utah real estate agents routinely have their home-selling clients fill out a set of standard disclosure forms and give these to the buyers prior to closing.

These written disclosures provide a wide range of information, such as the seller's knowledge of any zoning or legal violations on the property, legal actions affecting the property, whether it's located within a greenbelt, any damage to the roof, past-due utility payments, problems with culinary water, damaged sewer or septic tanks, damaged heating and cooling devices, damaged equipment, damaged features, damaged appliances, damaged fireplace or stove, termite damage, rot, mold, remodeling that affected a significant portion of the home, structural defects, boundary disputes, easements, electrical defects, water damage, hazards, toxins, location within the governance of a homeowners' association (HOA), past-due assessments to the HOA, and any property damage claims reported to an insurance agency.

The reason for these disclosures is simple. While most home buyers conduct an inspection and a "walk through" prior to purchasing a home, many also discover defects after the closing. At that point, they might bring suit against the seller. By disclosing as many defects as possible before the closing, sellers can actually increase buyers' awareness of issues with the home and reduce the chances of a fraud or nondisclosure suit.

Risks to the Seller Who Lies or Omits Facts Within the Seller's Disclosures

Even with the convenience of a seller's disclosure form, some sellers still try to conceal defects. Lying or misrepresenting the truth in a seller's disclosure could subject you to at least two types of liability: liability for fraud and liability for fraudulent nondisclosure.

Fraud: In Utah, lying in a way that induces someone to purchase your home is fraud. For instance, if you were to say that you've never repaired leaks in the basement, but in fact have patched an area that's now hidden by boxes, that would be a lie. Don't do it. Fill out the seller's disclosures, and fill them out honestly.

Fraudulent nondisclosure: Fraudulent nondisclosure involves failing to disclose a known material defect. For example, if you were to incorrectly claim that you never noticed any leakage in the basement at all, that would be a nondisclosure.

You might ask how you can know about and disclose every tiny problem with the house? It's true that some issues, like faulty wiring behind the walls or termites in the attic, might not have caught your attention. If that's the case, you cannot be expected to disclose them. The key is whether you knew or should have known about the problem.

Ask your real estate agent to provide you with a seller disclosure form (if the agent hasn't done so already). If you aren't represented by an agent, see whether you can obtain a form from an agent or get help with this task from a real estate attorney. In any case, be thorough and complete in making disclosures about your Utah home. It will allow you to successfully sell your home and avoid liability after closing.