Selling a home in Florida is a significant undertaking, demanding meticulous preparation and a thorough understanding of legal obligations. One of the most critical responsibilities falls on the seller: disclosing any known defects that could materially impact the property’s value or safety. But what happens when hidden issues surface after the ink has dried on the sales contract? What if the seller was genuinely unaware of these defects at the time of the transaction?
While Florida law generally shields sellers from liability for unknown problems, the situation is far from black and white. There are circumstances wherein potentially actionable disputes may arise. Let’s take a look into some of the complexities of post-sale defect disputes in the Sunshine State.
Florida’s disclosure requirements
Florida’s disclosure obligations stem from the landmark Johnson v. Davis (1985) case, establishing a seller’s duty to disclose known material defects not readily observable by the buyer. This common law principle, while foundational, is unfortunately subject to interpretation.
The definition of “material defects” can be subjective, encompassing issues that significantly impact a property’s value or desirability, such as structural problems, plumbing or electrical hazards, or environmental concerns.
Similarly, “readily observable” poses challenges, as hidden defects may escape a typical buyer’s inspection.
While Florida doesn’t mandate a specific statutory disclosure form, most real estate transactions utilize seller disclosure forms provided by real estate associations or brokers. These forms document the seller’s knowledge of various property conditions. However, it’s crucial to understand that these forms don’t replace the seller’s common law duty to disclose known material defects. Additionally, the specific wording of the sales contract, including “as-is” clauses, plays a significant role in determining liability.
Ultimately, sellers are typically not liable for defects they were unaware of at the time of a sale. If the issue of concern was hidden or undetectable and the seller had no actual knowledge of it, they generally cannot be held responsible after closing. Additionally, if a buyer waived inspection rights or purchased the home “as-is,” their ability to pursue legal action may be limited unless fraud or misrepresentation occurred. “As-is” clauses do not shield sellers from fraud or intentional misrepresentation.
The concept of “constructive knowledge” extends seller disclosure obligations beyond actual knowledge, requiring them to reveal defects they “should have known” through reasonable diligence. This means visible signs or red flags, like musty smells or water stains, necessitate investigation, preventing claims of ignorance; for example, a seller who ignores such signs and fails to disclose a hidden water leak and resulting mold could be held liable, even if they were not consciously aware of the full extent of the damage, as a prudent person would have investigated the obvious indicators. While unknown defects generally protect sellers, this concept limits that protection, emphasizing proactive investigation and disclosure. Sellers must act prudently, as willfully ignoring obvious issues can lead to legal repercussions, reinforcing their responsibility to be reasonably aware of their property’s condition and act in good faith.
Sellers who knowingly make inaccurate statements about a home’s condition or deliberately conceal defects, such as painting over water damage or making temporary fixes, face significant liability in Florida. These actions, whether outright lies, misleading omissions, or intentional concealment, demonstrate an intent to deceive and can form the basis of a successful lawsuit. The key legal question becomes whether the seller “knew or should have known” about the defect. Actual knowledge, along with constructive knowledge—where a seller should have discovered the defect through reasonable diligence—can hold sellers accountable.
Conversely, sellers are generally protected when they had neither actual nor constructive knowledge of a defect. This protection acknowledges the limitations of a seller’s awareness, especially with hidden issues. However, sellers should exercise due diligence, investigating any red flags and disclosing findings to buyers. Proactive disclosure minimizes post-sale disputes and demonstrates good faith. While perfect knowledge isn’t expected, sellers must act reasonably and honestly, ensuring transparency in real estate transactions.
This blog is just meant to be a brief overview of disclosure requirements in Florida. The nuances of this area of law are complicated and complex, but the above provides a good starting point if you are unsure about your position/rights relating to a sale. Contact Corey Szalai Law, PLLC to schedule a consultation to see how we can assist if you are unsure whether you need to disclose an issue with your property prior to a sale or, if you are a buyer, whether you have a claim against your seller for failure to disclose.