When buying or selling a home, the disclosure/discovery process is critical. It allows the buyer to understand the condition of the property they are about to invest in, while also protecting the seller from future legal claims. However, Realtors are often confused on what facts need to be disclosed to prospective buyers. In this bi-weekly newsletter, we will discuss the Seller’s disclosure obligations along with Agents obligations when representing a Seller.
How does Wyoming handle Seller Disclosures?
In most jurisdictions across the United States, Seller Disclosure statements are required during real estate transactions. However, in Wyoming, a seller is not legally obligated to provide a Seller’s Disclosure Statement. Instead, Wyoming follows a legal principle called “Caveat Emptor” which means “Buyer Beware.” This legal principle essentially puts the burden on the Buyer to conduct thorough investigations into the property before buying. This does not mean a Seller is able to lie or misrepresent material facts about the home. If asked, a Seller must tell the truth or risk being sued for fraudulent misrepresentation.
Are Wyoming Realtors held to the Same Standard as Sellers?
Wyoming Realtors are held to a higher standard than unrepresented Sellers. Wyo. Stat. § 33-28-303(c) states “A licensee acting as a seller’s agent owes no duty or obligation to the buyer, except that a licensee shall disclose to any prospective buyer all adverse material facts actually known by the licensee. Emphasis added.
As a Realtor, there are a few things to note about the text of § 33-28-303(c). First, that the agent must disclose adverse material facts. This means Realtors are only obligated to disclose a fact that significantly affects a property’s value or desirability. If a fact does not have an adverse affect, Realtors are not required to disclose.
Second, the adverse material fact must be actually known by the licensee. If the Licensee has no knowledge of such facts, they are not obligated to disclose the facts. Therefore, if you are an agent and do not have your clients fill out disclosure forms, do not ask your clients if there are any defects with the home! On the other hand, if you are a licensee, you cannot withhold any adverse material facts from potential buyers once your client has told you about said facts.
Realtor Practice Tip: So you don’t have to worry about what to disclose or buyers bringing suit after a transaction, Realtors should have Sellers fill out a Seller’s Disclosure Form to the best of their knowledge (do not have Sellers inspecting the property for defects) and provide that form to any prospective buyers.
Should Reators Disclose the Following Defects?
- A leak in the roof?
- A large crack in the concrete foundation?
- A faulty hot water heater?
- A septic system that occasionally clogs/backs up?
- Dusty looking substance built up around the wooden structures of the home?
- Presence of lead-based paint?
- Future construction plans on neighboring property?
If you are stuck wondering on a few examples above, your questions might continue to linger. Wyoming has not heard many cases regarding what constitutes a material defect that must be disclosed. However, here is a general answer for each with the assumption that the Realtor knows of each defect:
- Yes, a Realtor who knows of a leaky roof must disclose that information to prospective buyers.
- Yes, if there is a substantial crack in the concrete foundation, there is likely structural issues with the home that may be stemming from the home settling. A realtor should always disclose this information and advise that it be inspected.
- This one is a bit more tricky. While the hot water heater is not a major component of the home, most buyers expect it to work. This issue has not been litigated in Wyoming but, if in doubt, error on the side of disclosure.
- Yes, faulty septic systems are material defects that must be disclosed if the agent knows about the issue.
- Again, this must be disclosed. A dusty substance near wood structures is an indicator of termites. This is concern for structural damage and must be disclosed.
- Federal law requires the disclosure of known lead based paint and the possibility of lead based paint in any house constructed before 1978.
- Likely not, while this may seem like a significant impact on the property value, it is not a material defect. Therefore, it would likely not need to be disclosed.
Conclusion
Determining what to disclose and what not to disclose can be tricky. A general rule of thumb for licensed real estate agents is to disclose anything that affects the value or desirability of the property which you have actual knowledge of. Additionally, having clients fill out Property Disclosure Forms is a good way to protect yourself from lawsuits.
If you’re selling a home and are unsure about what needs to be disclosed, it’s a good idea to consult with a real estate professional or an attorney to help guide you through the process. Proper disclosure not only protects everyone involved but also fosters trust with the real estate community and smooth transactions. If you, as a realtor, find yourself in legal trouble give us a call!
This is not legal advice, instead this information is provided for educational purposes. If you have questions concerning legal matters, whether general or specific to an issue, seek legal advice from a licensed real estate attorney.