If you're considering buying or selling a home in Tennessee, it's crucial to understand the ins and outs of the state's property disclosure law. The Tennessee Residential Property Disclosure Act, Tenn. Code Ann. 66-5-201, et. seq., mandates that sellers provide buyers with a Property Disclosure Statement. However, despite this law, civil litigation regarding defects discovered in homes after the buyer has moved in is still prevalent. To help you navigate this complex landscape, here are the top eight things you need to know about Tennessee's real estate property disclosure law.
Tennessee Property Disclosure Law
-
Disclosure of Material Defects: Sellers are obligated to disclose the condition of the home, including any "material defects." "Material" essentially refers to any fact or condition that might influence a buyer's decision to purchase the property.
-
Disclosure Based on Seller's Knowledge: Sellers are only required to disclose information that they possess. They are not expected to have a home inspection, hire experts, or conduct independent investigations to uncover all potential issues with the property.
-
Disclosure Form is Not a Warranty: The disclosure form should not be mistaken for a warranty. It cannot replace a comprehensive home inspection. As a buyer, it's recommended that you hire your own home inspector to get a thorough understanding of the property's condition.
-
Exceptions to Disclosure Requirement: There are a few circumstances where sellers are exempt from making disclosures. These may include sales or transfers between co-owners, new construction, purchases from lenders after foreclosure, auction sales, or if the seller has not lived in the home within the three years leading up to the closing.
-
Sellers are Not Obligated to Repair Listed Items: It's essential to note that sellers are not required to fix any items listed as broken or defective in the disclosure. If you wish to have an item repaired, you must negotiate it as part of the final contract. Both the buyer and seller must mutually agree on the repairs before the closing.
-
Updated Disclosures Before Closing: Sellers must update their disclosures before the closing date. They need to address any material changes that have occurred since the initial disclosure or confirm that the original form remains accurate. As a buyer, you should insist on receiving an updated Disclosure Form signed and dated by the seller before closing.
-
Responsibility of Sellers vs. Real Estate Agents: The Disclosure Act holds sellers accountable for the information in the disclosure form, not real estate agents. Agents can only be held liable if they are signatories to the form. However, under the Tennessee Real Estate Broker License Act of 1973, agents are obligated to disclose any adverse facts that they are aware of, which may significantly impact the property's value or pose health risks to occupants.
-
Time Limit for Lawsuits: If a buyer believes that a seller has misrepresented information in the Disclosure Statement, any lawsuit against the seller must be filed within one year. Failure to do so within this timeframe may result in the loss of legal recourse.
Discovered a Problem After Closing?
If you encounter any issues with your newly purchased home and suspect that the seller or a real estate agent made false representations, it's crucial to consult with an attorney promptly. While legal action may not always be necessary, it's essential to be aware of any deadlines for filing a lawsuit, if needed. An experienced litigation attorney can guide you based on the specific facts of your situation.
If you require legal assistance or have questions about real estate transactions, sales, or disclosure laws in Tennessee, the attorneys at Patterson Bray are here to help. Contact us today at (901) 372-5003.
Additional Resources:
