|In Minnesota, sellers of residential real estate are typically required to make written disclosures to a prospective buyer unless they are waived in writing by the buyer and seller. These written disclosures must include all known facts that could adversely and significantly affect a buyer’s use and enjoyment or intended use of the property. Sellers often list out the defects and other issues within a home prior to listing a home for sale. A seller must disclose these facts in good faith and based upon the best of the seller’s knowledge at the time of the disclosure. If a material fact is not disclosed, a buyer may bring civil action and recover damages or other relief from the seller.
You can be in a disclosure dispute, whether you are a buyer or a seller. Imagine two scenarios where the parties did not waive disclosures: In one, you’re the buyer and you recently bought a home in December and when the snow melted in the spring, water flooded a portion of your basement. You believe that the sellers didn’t disclose previous basement flooding. In scenario two, you’re the seller and you sold your home two summers ago before receiving an email from the buyers asking why they were not told about a leaky pipe prior to purchasing the home. In both scenarios, you’d likely consider seeking legal counsel to assist with your problem. If either of them came to our firm, here are the first three things we always ask for:
1) Seller’s Property Disclosure Statement
Attached to the purchase agreement or closing documents should be a copy of the Seller’s Property Disclosure Statement. The seller’s disclosures contain a wealth of information about the home. The standard Minnesota form will include sections on fire damage, flooding, property damage, appliances, and electrical and plumbing systems among other things. A legitimate nondisclosure claim starts with this document and it often makes or breaks the entire legal dispute.
2) Property Inspection Report
The second document we need is the property inspection report. It is commonplace that buyers inspect a home before purchasing it. Under Minnesota law, a seller is not required to disclose information if a third-party inspection report discloses that information to the prospective buyer unless a seller is aware of facts that contradict the inspection. We need to know what the inspection found.
3) Purchase Agreement
The last document you need is the aforementioned purchase agreement. A purchase agreement contains two pieces of vital information: the date of closing and arbitration-related agreements. The date of closing is important because statutory nondisclosure claims must be brought within two years after closing. (See Minnesota Statute Section 513.57, subd. 2 (2019)). Minnesota residential real estate purchase agreements also often contain arbitration provisions. If the parties have agreed to arbitration, it changes the analysis of a claim and the time frame in which a dispute is resolved.
We can start our analysis with those documents in hand, so it’s important to hang on to them after closing. After that, the matter could blossom into arbitration or litigation or could be resolved with a simple letter or phone call.