When a prospective buyer views a property there are always unanswered questions, such as whether it has a clear title, if there are property boundary issues, and the true age of the roof. Many of these answers aren’t available until the seller’s disclosures reveal them.
The advice of a qualified real estate attorney can help a buyer dissect the seller’s disclosures to determine if a property purchase is too risky to pursue. Disclosures can be crafted to hide as much as they reveal, potentially clouding and delaying the closing process.
Minnesota Law Regarding Property Disclosures
Written disclosures are required under Minnesota law, and they must be presented to the prospective buyer before a purchase agreement is signed. Disclosures must include the following:
- Information regarding defects that may interfere with the buyer’s intended use of the property, and
- Information about issues that may impact the buyer’s use and enjoyment of the property
“Material facts” is the key phrase in the law: these are information points that a typical buyer would see as significant to their decision to move forward with a purchase or the amount to pay for the property. Material facts may include:
- Roof or structural problems
- Drainage issues or water intrusion
- Pest infestations
- Defects in the heating or cooling systems
- Radon testing results
- Well and/or septic system issues
- Other hazardous conditions like previous use as a methamphetamine laboratory (a required disclosure under Minnesota law)
The seller is obliged to make the disclosures in good faith and based on their best knowledge of the property at the time.
Additional disclosures may apply to the property. Under federal law, sellers must explain the presence of lead paint on the property if it was constructed before 1978. Sales of older homes must include an information pamphlet related to lead hazards.
Minnesota requires a seller’s property disclosure statement. This can be found online or provided by a realtor. Additional forms are required for specific issues, such as:
- Radon testing and mitigation
- Well and sewage systems
- Common Interest Community (CIC) resale disclosures when the property is within a condo or tenant’s association community
- Contract for deed disclosures if certain types of seller financing is involved
- Methamphetamine contamination disclosure
Exceptions to Minnesota’s disclosure law may exclude the property transaction from disclosures. These can include:
- Property transferred to heirs or by inheritance
- Sales to government agencies
- Foreclosures or deeds in lieu of foreclosure
- Sales of newly-constructed homes that have never been lived in
Reports by a qualified third-party property inspector may, under certain conditions, substitute for a seller’s disclosure. These are thorough home inspections done by a licensed professional. Sellers must still report any known material facts that contradict the inspector’s findings.
In addition, the buyer may agree to waive the seller’s disclosure requirements, usually in negotiations over the selling price. That leaves the buyer exposed, yet perhaps with enough money to address any unknown issues. This can also be a bargaining point if there is a lot of competition for buying the property. A waiver does not shield the seller if they acted fraudulently.
Every detail of a property’s history is not disclosed under state law. Even if a seller knows if there was a suicide on the property, if an occupant had a serious communicable disease, or if there are group homes or similar facilities nearby, state law does not compel the seller to reveal the information.
Failing to disclose the required information can result in legal action. A buyer may rescind the purchase agreement, seek monetary damages, or file a civil complaint for breach of contract or misrepresentation. Check with the Minnesota Attorney General’s Office for consumer protection information.
Getting Guidance from a Trusted Source
An experienced real estate attorney from Waypoint Law can ensure that the seller’s disclosure requirement is met before a sale is closed, and that the buyer’s rights are protected. Legal oversight and guidance through the process of purchasing a property promotes confidence that no unforeseen issues will complicate ownership. Call for a consultation today.