Mandatory Disclosures in Sales of Residential Property

Property Covered

In 1993, Ohio made a law that says you must tell certain things when selling a home. This rule applies to selling houses, land installment contracts, leases with the option to buy, exchanges, or long-term leases. A "transfer" happens when the first contract is signed, not when the new owner gets the title. The law covers houses and buildings with one to four homes inside.

Some transfers don't need these disclosures. For example, if the transfer happens because of a court order, to or from the government, due to mortgage default, by a guardian or trustee, between co-owners, or within a family. Also, newly built homes or homes the buyer has lived in for more than a year don't need these disclosures.

Condominiums

Selling a condominium may or may not need these disclosures. In 2001, a court said sellers don't have to tell buyers about problems in shared areas or other units. However, it's safest for sellers to share known issues in shared spaces.

Required Form

When selling a house, you must fill out a property disclosure form. This form, created by the Ohio Director of Commerce, tells buyers about the home's physical condition, water supply, sewer system, structure, hazardous materials, and any known defects.

Since January 1, 2004, the form includes more details like mold inspections, smoke damage, floodplain location, historical area status, and fees or assessments. Sellers must also tell about problems with mechanical systems, water quality, and property use. The form explains that the seller's statements are based on their knowledge and that buyers should inspect the property themselves.

The seller must give a signed copy of this form to each potential buyer or their agent as soon as possible. Sellers must act honestly and can make a good guess if they don't know something.

Liability for Failure to Disclose

Sellers must disclose all known material defects on the form. If they don't, buyers can sue for fraud. The seller doesn't need to inspect their property for defects; the buyer must do this. Sellers aren't liable for unknown errors on the form but must disclose known issues to avoid fraud.

Even if a buyer agrees to buy a house "as-is," they can still sue for fraud if the seller lied about something important. Courts have ruled that sellers must be honest, and buyers should prove fraud if they believe the seller hid a major defect.

Right of Rescission

If a buyer gets the disclosure form after signing the contract, they have three business days to cancel without penalty and get a refund. This right ends 30 days after the seller accepts the offer or at closing, whichever is first. Buyers can waive this right, and other remedies may still be available.

Practical Consequences

Mandatory disclosures give buyers important information but offer limited remedies. The law aims to reduce issues from the "buyer beware" rule but requires fraud to be proven for relief.

Federally Mandated Disclosure of Lead-Based Paint

Sellers must follow federal rules for lead-based paint disclosure for homes built before 1978. They must give buyers or tenants a lead hazard information pamphlet and disclose any known lead-based paint hazards. Buyers have ten days to inspect for lead, which they can waive in writing.

Enforcement

Penalties exist for not following lead disclosure rules, including fines and liability for damages. Both HUD and EPA can impose penalties, and violations may result in civil or criminal charges.

In Ohio, mandatory disclosures play a crucial role in residential property sales, ensuring transparency and protecting the interests of both buyers and sellers. If you are selling your home, it is essential to understand and comply with these disclosure requirements. Consulting with a real estate professional or attorney, like those at N.P. Weiss Law can help you navigate the disclosure process and ensure all necessary information is accurately provided.

For buyers, reviewing the disclosure form thoroughly and asking questions about any concerns can help you make a well-informed decision and avoid potential issues down the line.