Your house may not be perfect, but it’s your home, and you love its little quirks. That is, until it’s time to sell it, and you realize that potential buyers may find those “quirks” problematic enough that they decide not to make an offer. Learn what you need to disclose when selling your house in Michigan.
When is Property Disclosure Required?
First of all, let’s take a look at what is considered a “house” for purposes of property disclosures. If you’re selling a residential property between one and four units, you will probably have to fill out a Michigan disclosure statement. Properties that fall under this umbrella include single family homes, duplexes, and apartment buildings of four units or fewer.
Furthermore, the method of sale probably won’t make a difference. Whether you are selling through a conventional (deeded) sale, land contract, or lease with option to buy, a disclosure statement is required. There are some situations in which a disclosure is not required, including:
- transfers between co-tenants
- transfers made to a spouse, parent, child, grandparent, or grandchild
- transfers between spouses pursuant to a divorce judgment or judgment of separation
- transfers pursuant to court order, including probate, bankruptcy, or foreclosure
- some transfers of newly-constructed residential property that has not been lived in
- transfers to or from a governmental entity.
Assuming that you are simply selling the home in which you live to a willing buyer, however, you will most likely need to complete a Michigan disclosure statement. Let’s talk about what you need to include in it, and what happens if you misrepresent or fail to disclose something important.
What Needs to Be Disclosed on a Michigan Disclosure Statement?
You are required to disclose all problems with the house of which you are aware, as well as any other fact that would have a substantial impact on the value of the property or its desirability. This includes environmental issues, such as asbestos, radon, lead paint, contaminated soil, or underground storage tanks.
You are also required to disclose information about the condition of the property, such as evidence of roof leaks or water in the basement or crawlspace, problems with the plumbing or electrical systems, and any history of infestation, including carpenter ants or termites as well as other pests. If there is evidence of settling, flooding, drainage, or grading problems, you must also make those known to a buyer. And if you, or a previous owner, have made structural modifications to the property without building permits or licensed contractors, you need to reveal those, as well.
The condition of the property is not the only thing that can affect its value, of course. You must also let potential sellers know about proximity of the property to nuisances such as an airport, shooting range, or farm operation. You must disclose any encroachments or easements, and any nonconforming uses or zoning violations. Likewise, if there are features of the home such as landscaping or a driveway that are shared with other landowners, you are required to disclose those as well. If there are situations that might limit a buyer, such as the home being located in a historic district or wetlands, those must be disclosed.
Details that could affect finances must also be disclosed to a buyer. These include whether there are any outstanding utility assessments or fees, any outstanding municipal investments or fees, and whether there is any pending litigation that could affect your right to convey the property. While such a circumstance is admittedly rare, this is obviously a piece of information that could be a deal-breaker for a buyer.
The Michigan disclosure statement also requests information about appliances and systems in the house from the garage door opener to the air conditioning and sump pump. As with all information on the disclosure form, you are obligated to be truthful, but you are not obligated to guess about information you don’t have or to inspect the property. If you personally know information being requested, include it. If not, don’t guess or estimate. If your information came from another source, like public record, you are not responsible if that information that you included in good faith later turns out to be incorrect.
Why is it important to be truthful on your disclosure form? Aside from the fact that it’s the right thing to do (and what you would want someone to do for you), you could be exposing yourself to risk if you are dishonest. Before the sale, misrepresentation could justify the buyer canceling the sale. Even if the sale goes through, the buyer could later take action against you for misrepresentation or fraud. In the end, that could be much more costly than having accepted a lower price on the house due to a defect you concealed.
If you have questions about what you need to disclose when selling your house, it’s worthwhile to contact an experienced Michigan real estate attorney.
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