How to Deal With Non-Disclosure and Misrepresentations In a Real Estate Purchase

Failure to disclose material information and misrepresentations in a real estate purchase can expose a seller to liability. This can result in significant monetary damages, or in extreme cases, a rescission of the real purchase contract, forcing the seller to take back the property.

A dissatisfied buyer will evaluate whether the seller actually made a false statement or failed to make a required disclosure. A real estate seller must be cautious about both of these issues.

Failure to Disclose Known Defects

A seller of real estate in Arizona must disclose material defects that the seller has actual knowledge of.  This is usually an express contractual requirement and is typically done on a disclosure statement.

The seller does not necessarily have to fix these defects, only to make the buyer aware of them. The seller also does not have to conduct an investigation; he or she must only disclose known defects. This requirement also exists when selling real estate “as is”.  In fact, an “as is” buyer is particularly concerned about knowing the condition of the property, because upon closing they accept it without any warranties.

A seller should not guess when disclosing, an inaccurate disclosure may have the effect of covering something up or misleading a purchaser.  A seller should not speculate and should disclose precisely what is known, nothing more and nothing less.  If the seller is unsure what to disclose or how to draft accurate disclosures, an Arizona real estate attorney can assist.

Types of Misrepresentations

Misrepresentations are actual false statements of fact. Misrepresentations may be intentional, which is fraud.  They may also be unintentional or accidental, negligent.  Also say something without knowing it to be true, even if you believe it is true, is a misrepresentation because the statement implies you actually know it is true when you do not..

To have a claim, the buyer must actually believe the representation, rely upon it when making the purchase, and suffer damages as a result. The buyer may file a lawsuit for damages caused by the failure to disclose or misrepresentations that resulted in loss of value to the property or other monetary damages. In some cases, the contract may be rescinded, forcing the seller to take back the property and refund the buyer’s money.

Chernoff Law handles real estate disputes, including non-disclosure and misrepresentation claims. Call us at 480-719-7307 to discuss your case with one of our real estate lawyers.