I was at a luncheon with many of central Iowa’s commercial real estate agents this past Wednesday and the subject of residential real estate came up. Bankers like to attend these luncheons because owners, buyers, investors and developers usually mean lending can’t be far behind. Seated at my table were some very seasoned bankers from Des Moines. Normally we discuss the direction of rates, but this day over the entree we discussed an ongoing lawsuit about the buyer suing over the sellers not disclosing defects in the home. The problem for these bankers was a critical misunderstanding about Iowa’s Residential Sellers’ Disclosure Statement.
It seems the sellers tried to sell their home “as-is”. The bankers were stymied about how the buyer could sue the sellers for defects when the buyer bought the property “as-is”. Everyone at the table wanted to blame the buyer for being too anxious to buy the home. Well, not everyone seated at our table, Katrina, Barbara and I just smiled at those attempting to blame the sue-happy lawyers. I was quick to point out they were all incorrect in assuming that in Iowa anyone is ever allowed to sell a home as-is. You can’t so don’t try it.
I start off by making one simple statement that seemed to get everyone’s attention: In Iowa caveat emptor is dead.
I said it and then they looked at me with bewilderment. What’s that?
Caveat emptor is a Latin phrase meaning “let the buyer beware.”
It was, but it’s no longer the law of the land in Iowa. In Iowa the legislature passed a law, requiring sellers of residential real estate to disclose material facts about their homes to potential buyers. And if you don’t you are setting yourself up to be sued – big time!
You have to make the disclosures in writing and they had better be accurate.
This whole “as-is” business is passé. You can’t sell residential real estate in Iowa without making material disclosures; PERIOD.
So if anyone is telling you to write ‘as-is’ into the deal don’t.
There is a case right on point where two real estate agent owners crossed out the disclosure questions with a nice big “X” and wrote on the form, ‘Seller never lived in the property’. But guess what that didn’t insulate them from being successfully sued. You can’t change the law just because you don’t like it or think you are somehow exempt. You aren’t and you can’t, so don’t try it.
You see even professionals don’t understand what the law requires. What is required is a complete and truthful disclosure about anything material to the buy. Let us keep in mind this is not 1950, it is 2013.
Katrina and I have our own proprietary work-sheet and provide a valuable service to sellers and to buyers. Because if the sellers don’t hire us to assist them the buyers sure can after the sale when this or that doesn’t work or leaks or grows mold or whatever the defect might be.
You can read all about Iowa’s Residential Sellers’ Disclosure law at the Iowa Real Estate Lawyer, blog that Katrina and I have created.
And if you have legal questions about the sale of your home, don’t hesitate to call Katrina or me to find out if we can help you. As many of you already know I am both a lawyer and a licensed real estate broker in Iowa and enjoy the involvement of fishing in either camp. 515-222-1110 or [email protected] or [email protected].