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 a qualified and trusted Minneapolis/St. Paul real estate attorney, please call Mr. Kelsch 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.