The completion of the Seller’s Disclosure Statement is a task that is often taken lightly by a Seller of residential real estate when they are preparing to sell their house. In fact, many individuals when faced with completing this task give it little thought and complete it in a cursory fashion. What a Seller should be aware of, however, is that any misstatement of fact, whether intentional or not may subject a Seller to liability post-closing. In the State of New Jersey a Seller of residential real estate has a duty to disclose any and all latent defects with regard to the condition of their property. A latent condition is a condition that is not otherwise observable, or in essence, hidden. Examples of latent conditions are radon contamination, underground oil tank leaks, or a history of water problems. If a Seller fails to disclose the existence of a latent defect of which they have knowledge, this party may be subject legal claims post closing for failure to disclose the defect(s). The Claims that may be filed against a Seller would be claims of fraudulent concealment or fraudulent misrepresentation.
In order for a Plaintiff to prevail on a claim of fraudulent concealment or fraudulent misrepresentation, the plaintiff must first establish that the Seller had actual knowledge of the defect and that the Seller either fraudulently misrepresented the condition or failed to disclose same to the Buyers. Thereafter, the Plaintiff must demonstrate that the defect was material to the real estate transaction. It is for this reason that the careful completion of a Seller’s Disclosure Statement is extremely important when a party is selling their real estate.
In order to avoid being subjected to a lawsuit post-closing, a seller should make sure that the Seller’s Disclosure Statement is accurate and inclusive. If it is completed in this fashion, it is far less likely that a party could be subjected to claims for fraudulent concealment or fraudulent misrepresentation. Obviously, in this harsh economic climate it is better to put yourself in a position where you are far less likely to be sued rather than in a position where you might be sued due to a simple lack of diligence in completing the Seller’s Disclosure Statement.
If you feel you are the victim of fraudulent misrepresentations or omissions, you should be aware that prosecuting this type of claim is challenging. You must first establish that the party had actual or constructive knowledge of the defect and that they either misrepresented the condition or failed to disclose same. As such, you must present evidence which demonstrates that the condition existed and that the purchaser either had actual knowledge or constructive knowledge of same. Although a party may believe that the Seller had actual knowledge of a defect, it nonetheless carries the burden of proof. Thereafter, you must demonstrate that the defect was material to the real estate transaction.
As such, the simple a task of completing the Seller’s Disclosure Statement may seem, it is important that it be taken seriously, as it may expose a Seller of residential real estate to lawsuits post-closing should this document not be properly completed.
