Top 8 Things to Know About Tennessee Residential Property Disclosure Law
If you are thinking of buying or selling a home, you may have questions about the basics on Tennessee property disclosure law. The Tennessee Residential Property Disclosure Act, Tenn. Code Ann. 66-5-201, et. seq., requires the Seller of a home to provide the Buyer with a Property Disclosure Statement. Despite this law, there is still a large amount of civil litigation arising from defects discovered in a home after the Buyer has moved in. Be aware of these top things to know about Tennessee real estate property disclosure law:
Tennessee Property Disclosure Law
- Sellers are required to disclose the condition of the home, including any “material defects.” What does “material” mean? Generally, any fact or condition that might affect a Buyer’s decision to purchase the home.
- Sellers are only required to disclose based on the information they have. Sellers are not required to have a home inspection, hire experts, or conduct an independent investigation to discover everything that might be wrong with their home.
- The Disclosure Statement is not a warranty. The disclosure form is not a substitute for a thorough home inspection. If you are the Buyer, you shouldn’t just rely on the disclosure form. Hire your own home inspector.
- Some sellers are exempt from making disclosures. Common exceptions include sales or transfers between co-owners, new construction, purchases from lenders after foreclosure, auction sales, or if the Seller has not lived in the home within the 3 years before the Closing.
- Sellers are NOT Required to Repair Items listed in the Disclosure. If you are the Buyer, be aware that Sellers don’t have to fix anything listed as broken or defective. If you want an item repaired, you must contract for it. In other words, both Buyer and Seller must agree in the final contract that an item will be repaired by the Seller before closing.
- Sellers ARE required to update their disclosures before closing. Sellers must update to address any material changes that have taken place since the original date of disclosure, or to confirm to the buyer that the original form is still accurate. Tenn. Code. Ann. 66-5-205. If you are the Buyer, you should not close on a home without seeing an updated Disclosure Form signed and dated by the Seller.
- Representations in the Disclosure Form are those of the Seller only, and not the Real Estate Agents. The Disclosure Act applies only to Sellers. An agent can’t be sued under the Disclosure Act for information contained in a Seller’s disclosure form unless the agent is a signatory. Tenn. Code. Ann. 66-5-202; 66-5-208. However, real estate agents have certain disclosure duties pursuant to the Tennessee Real Estate Broker License Act of 1973. Under the Real Estate Broker License Act, a real estate agent is required to “[d]isclose to each party to the transaction any “adverse facts” of which the licensee has actual notice or knowledge.” Tenn. Code Ann. § 62-13-403. What are adverse facts? Both Acts define adverse facts as conditions or occurrences generally recognized by competent agents that significantly reduce the structural integrity of improvements to real property or present a significant health risk to occupants of the property. Tenn. Code Ann. § 62–13–102(2); § 66–5–206. However, the definition of adverse facts found in the Real Estate Broker License Act also contains a third prong, for conditions or occurrences that “have negative impact on the value of the real estate.” Tenn. Code Ann. §62-13-102(2). See Ledbetter v. Schacht, 395 S.W.3d 130, 136 (Tenn. Ct. App. 2012).
- Any lawsuit against a Seller for a misrepresentation in a Disclosure Statement must be filed within one (1) year. Any cause of action based directly on the disclosure law statutes will be lost if not filed within one (1) year from the date the buyer received the disclosure statement or the date of closing, or occupancy, whichever occurs first. Tenn. Code Ann. § 66-5-208.
Discovered a problem after closing?
If there is “trouble in paradise” with your new home and you think the Seller or a Real Estate Agent made a misrepresentation concerning the home, speak with an attorney as soon as possible.
While a lawsuit is not always necessary to resolve a legal issue, remember there are deadlines within which to file a lawsuit, if necessary. An experienced litigation attorney can advise you of your options based on the particular facts of your situation.
Want to speak with an Attorney?
The attorneys at Wiseman Bray PLLC are experienced litigation and contract lawyers. We understand real estate transactions and sales, and we know the disclosure laws applying to both home sellers and real estate agents and brokers in Tennessee. Call us today at (901) 372-5003.