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New Laws on Seller Beware
Thomas M Fafinski
The new seller disclosure requirements in Minnesota, found in Minn. Stat. § 513.52-513.60 (“Seller Beware”), apply to the transfer of any interest in residential real estate with few exceptions. It is a written disclosure which must be made prior to the signing any agreement to sell or transfer, includes transfers by exchange, contract for deed, lease with an option to purchase, or any other option.
Transfers Where No Disclosure Required
It does not, however, include the following transfers (in no particular order):
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the buyer and seller specifically agree in writing to make no such disclosure;
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of non-residential real property;
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ordered by a Court or transfered to the government;
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from foreclosures or deed in lieu of foreclosure;
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to a spouse, parent, grandparent, child, or grandchild, ex-spouse, heirs, decendant or gift
receipient;
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of newly constructed, previously uninhabited, residential property;
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by an option to purchase a unit in a common interest community, until exercised;
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to a cotenant or tenant who is in possession of the residential real property;
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of certain grantor transfers to common interest communities.
In other words, if you are buying property and conducting a “lease to own” program, you are probably exempt from the disclosure requirements. If you acquire property from a foreclosure proceeding or a deed in lieu, there are no disclosure requirements.
When Disclosures Do Not Have To Be Made
A seller is not required to disclose information relating to the physical condition of the real property if a written report that discloses the information has been prepared by a qualified third party and provided to the prospective buyer. For purposes of this paragraph, "qualified third party" means a federal, state, or local governmental agency, or any person whom the seller, or prospective buyer, reasonably believes has the expertise necessary to meet the industry standards of practice for the type of inspection or investigation that has been conducted by the third party in order to prepare the written report. A seller can provide the written disclosure to a real estate agent representing or assisting the prospective buyer in lieu of giving it to the buyer. Obviously the real estate agent representing or assisting the prospective buyer has to provide a copy to the prospective buyer. However, the seller still has to disclose to the prospective buyer material facts known by the seller that contradict any information included in a written report if a copy of the report is provided to the seller.
Contents of the Disclosure
The disclosure, when applicable, has to include all material facts pertaining to adverse physical conditions in the property of which the seller is aware. The disclosure relates to those facts which could adversely and significantly affect an ordinary buyer's use and enjoyment of the property; or any intended use of the property of which the seller is aware. The disclosure must be made in good faith and based upon the best of the seller's knowledge at the time of the disclosure.
Items Not Required to Be Disclosed
The Seller Beware disclosures do not, however, create any duty to disclose the fact that residential property is or was occupied by an owner or occupant who is or was suspected to have AID or HIV, was the site of a suicide, accidental death, natural death, or perceived paranormal activity, or is located in a neighborhood containing any adult family home, community-based residential facility, or nursing home. There also is no duty duty to disclose information regarding an offender who is required to register as long as the seller (in a timely manner) provides a written notice that information about the predatory offender registry and persons registered with the registry may be obtained by contacting the local law enforcement agency where the property is located or the department of corrections.
Liability for Bad Disclosure
Unless the prospective buyer and seller agree to the contrary in writing, a seller is not liable for any error, inaccuracy, or omission of any information delivered if the error, inaccuracy, or omission was not within the personal knowledge of the seller and ordinary care was exercised in transmitting the information. Whether the seller has been forthcoming will be an issue for the jury or finder of fact to decide though.
It is not a violation of the Seller Beware Statute if the seller fails to disclose information that could be obtained only through inspection or observation of inaccessible portions of the real estate or could be discovered only by a person with expertise in a science or trade beyond the knowledge of the seller.
A seller who fails to make a disclosure required and was aware of the condition of the real property is liable to the prospective buyer. A person injured by a violation of this section may bring a law suit to recover damages and receive other equitable relief, as long as the action is started within two years of the date on which the prospective buyer closed the purchase or transfer of the real property. The transfer of title itself is not invalidated solely because of the failure of any person to comply but nothing in the Seller Beware Statute prevents a court from ordering a rescission of the transfer.
| Thomas M. Fafinski is an
attorney with BenePartum Law Group, P.A. He has been named
a Minnesota SuperLawyer by Minneapolis/St.Paul Magazine,
Twin Cities Business Monthly and Minnesota Law &
Politics in 1999, 2000, 2001 and 2002. He has been
selected to serve on the National Business Advisory
Counsel as a Minnesota Co-Chair person. BenePartum Law
Group, P.A. is a law firm that is preoccupied with its
clients rather than itself. It focuses on business owners,
investors and entrepreneurs. BenePartum Law Group, P.A.
utilizes its legal representation opportunities as a
vehicle to enhance the wealth of the business owner,
investor or entrepreneur.
Thomas M Fafinski
BenePartum Law Group, P.A.
860 Blue Gentian Rd, Suite 295
Eagan, MN 55121
(651) 994-4300
Email: tfafinski@benepartum.com
Website: http://www.benepartum.com |
To your success,
Mike Jacka
www.realestatepromo.com
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