Disclosure Law and Inspections

[Souix]

What is the name of your state? Oregon

This question is aimed at the attorneys on this site, but if you know the answer please post.

During the course of our educational office meeting today, we had a discussion about the seller's disclosure. Seller had checked the box "no" they did not have a pumping station from their septic tank, when actually they did have a pumping station. During the course of buyer's inspection, it was discovered that there was not only 1 pump station but 2 pump stations. Our principal broker told us that we would have to go back to the seller and have them revise their disclosure statement to say that there is a pump station on the property and the revocation period would start from the date the revised disclosure statement was given to the buyer for their signature. Well, I don't have a problem with that, BUT.....she also said that if in the future the pump station broke and the buyers had to have it repaired, that they would have a cause of action because the seller did not disclose the pump station (if we had not had them revise it). This didn't seem right to me, because the buyers had the septic system inspected through their due diligence, so how could they possibly have a cause of action to say they never knew about it? So is my PB right or wrong?

 

[HomeGuru]

What is the name of your state? Oregon

This question is aimed at the attorneys on this site, but if you know the answer please post.

During the course of our educational office meeting today, we had a discussion about the seller's disclosure. Seller had checked the box "no" they did not have a pumping station from their septic tank, when actually they did have a pumping station. During the course of buyer's inspection, it was discovered that there was not only 1 pump station but 2 pump stations. Our principal broker told us that we would have to go back to the seller and have them revise their disclosure statement to say that there is a pump station on the property and the revocation period would start from the date the revised disclosure statement was given to the buyer for their signature. Well, I don't have a problem with that, BUT.....she also said that if in the future the pump station broke and the buyers had to have it repaired, that they would have a cause of action because the seller did not disclose the pump station (if we had not had them revise it). This didn't seem right to me, because the buyers had the septic system inspected through their due diligence, so how could they possibly have a cause of action to say they never knew about it? So is my PB right or wrong?

**A: your PB is correct on the disclosure requirement of any newly discovered material fact. If in fact the pump station was disclosed on the revised disclosure statement, the pump stations would fall under the general warranties of the home per the sales contract.
If the disclosure statement was not revised, then the Buyer would have a cause of action against both the Seller and the listing agent, but not really for the repair of the stations but for non disclosure of a material fact.

 

[Souix]

**A: your PB is correct on the disclosure requirement of any newly discovered material fact. If in fact the pump station was disclosed on the revised disclosure statement, the pump stations would fall under the general warranties of the home per the sales contract.
If the disclosure statement was not revised, then the Buyer would have a cause of action against both the Seller and the listing agent, but not really for the repair of the stations but for non disclosure of a material fact.

***So what could be gained here by the buyer? The buyer had the system inspected and at that time all parties were aware that pump stations exist but the disclosure was never changed by the seller. The buyer agreed to repair the system before closing at his expense. Wouldn't this be obvious to the buyer that pump stations exist? Why would anyone waste their time bringing an action for non disclosure? I guess what I'm trying to say is, whats in it for the buyer?***

 

[HomeGuru]

***So what could be gained here by the buyer? The buyer had the system inspected and at that time all parties were aware that pump stations exist but the disclosure was never changed by the seller. The buyer agreed to repair the system before closing at his expense.

**A: if that agreement to repair is in writing then the Seller has no further obligation. But you did not provide this info earlier.
****
Wouldn't this be obvious to the buyer that pump stations exist?

**A: yes.
*******
Why would anyone waste their time bringing an action for non disclosure? I guess what I'm trying to say is, whats in it for the buyer?***

**A: it may be for the money since the brokerage firm may have a big E&O policy and may just pay out just to settle the case.

 

[Souix]

***So what could be gained here by the buyer? The buyer had the system inspected and at that time all parties were aware that pump stations exist but the disclosure was never changed by the seller. The buyer agreed to repair the system before closing at his expense.

**A: if that agreement to repair is in writing then the Seller has no further obligation. But you did not provide this info earlier.
****
Wouldn't this be obvious to the buyer that pump stations exist?

**A: yes.
*******
Why would anyone waste their time bringing an action for non disclosure? I guess what I'm trying to say is, whats in it for the buyer?***

**A: it may be for the money since the brokerage firm may have a big E&O policy and may just pay out just to settle the case.

***Ok that sounds a little more logical to me. Essentially my PB said that it didn't matter if the buyer had an inspection or who agreed to make the repairs, the buyer still could come back later and say failure to disclose, and that just didn't seem logical to any of us. Yes, sorry, at first the seller agreed to repair and then the buyer said just credit us the funds and we'll repair it after closing. There was also a hold harmless agreement if they uncovered any huge issues with the septic after closing. Thanks I will pass your response along***

 

[HomeGuru]

Please do pass the response along.