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Purchase Agreement Disclosures: Too Much is Better Than Not Enough

Purchase Agreement Disclosures: Too Much is Better Than Not Enough

WHAT IS A PURCHASE AGREEMENT DISCLOSURE?

To disclose means to make information known, and a real estate purchase agreement disclosure does exactly that; it apprises potential buyers of the condition of the property. These statements are typically given once a buyer has accepted an offer. In Minnesota and most other States, disclosure statements are not required for commercial property, or when acquiring a foreclosed property at sheriff’s sale or via a deed in lieu of foreclosure.

WHY IS A PURCHASE AGREEMENT DISCLOSURE IMPORTANT?

In Minnesota, sellers are required under the law to disclose all material facts of which they are aware that could adversely and significantly affect an ordinary buyer’s use or enjoyment of the property or any intended use of the property. (Codified at Minn.Stat., §§ 513-52-513.60). However, this does not extend to the duty on the part of a seller to acquire knowledge or discover matters that are not in fact known by the seller. For example, although a seller would be required to disclose a potential issue with the roofing due to a leaking ceiling, he would have no obligation to perform an inspection of the roof in the absence of any water intrusion. The key with disclosure laws is to protect buyers from fraudulent non-disclosures. That objective isn’t met if sellers are held accountable for defects of which they are unaware.

The duty to disclose exists irrespective of whether one of the parties has procured a third-party inspection. To avoid liability, sellers must disclose material facts of personal knowledge that contradict or are not included in the inspection report. Using an inspection report as a front to conceal known defects will result in fraud exposure, a scenario that should be avoided at all cost.

Sellers should understand that no property is completely perfect, and that revealing flaws in an objective manner will allow both buyer and seller to close the transaction with all eyes wide open, reducing the likelihood that a buyer will later attempt to unwind the deal on fraud grounds. 

This website features educational information based on general legal principles.  Specific legal advice is contingent upon the unique facts of each case.  Therefore, you should not rely only on this information for your particular legal issue.  Contact an attorney to obtain advice specific to your legal situation.  Read our full disclaimer.

If you're looking for qualified and trusted Minneapolis/St. Paul real estate attorneys, please call our Golden Valley office at 763-398-1676 or fill out this quick form to schedule a consultation.

This website features educational information based on general legal principles in Minnesota.  Specific legal advice is contingent upon the unique facts of each case.  Therefore, you should not rely only on this information for your particular legal issue.  Contact an attorney to obtain advice specific to your legal situation.  Read our full disclaimer.
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Comments 8

 
Guest - susan on Saturday, 16 May 2015 20:28

Thank you for the information. I will pass this along to my friends and family.

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Thank you for the information. I will pass this along to my friends and family.
Guest - Stephanie on Sunday, 17 May 2015 19:29

Thanks for sharing! This could be useful.

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Thanks for sharing! This could be useful.
Guest - John Lopez on Sunday, 17 May 2015 21:43

Thank you for sharing this information, this is really important and now I know why.

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Thank you for sharing this information, this is really important and now I know why.
Guest - Elizabeth O. on Monday, 18 May 2015 10:31

Good info. Buyers must really look into this when buying a property.

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Good info. Buyers must really look into this when buying a property.
Guest - Tami on Monday, 18 May 2015 11:37

You definitely need to protect yourself. This is a great way to help achieve it.

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You definitely need to protect yourself. This is a great way to help achieve it.
Guest - Dogvills on Monday, 18 May 2015 14:14

This is good to know. Including a lot of information on the purchase agreement disclosure is important as it will protect both parties

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This is good to know. Including a lot of information on the purchase agreement disclosure is important as it will protect both parties
Guest - Manu Kalia on Monday, 18 May 2015 14:17

This is a valuable information, I could use this one. Thank you for sharing

0
This is a valuable information, I could use this one. Thank you for sharing
Guest - rose on Monday, 18 May 2015 19:54

I can't even imagine not knowing something was wrong then a buyer finding it. I think that'd be a big nightmare.

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I can't even imagine not knowing something was wrong then a buyer finding it. I think that'd be a big nightmare.

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