March 16, 2011

Do NC Home Sellers Have to Disclose Property Defects

Do North Carolina home sellers have to disclose property defects?

This question comes up a lot, both from sellers and buyers.  Sellers may know of a condition that may affect the sale of their house and fear that it will cause problems.  Buyers, especially those that have bought a house and then find a major issue, often feel that the seller has misrepresented the property to them.

So, do NC sellers have to disclose all that they know about the property?  The short answer is No, they do not.


That may seem surprising to some, but North Carolina is a Caveat emptor state.  Caveat emptor is latin for "let the buyer beware."  In other words, it's up to the buyer to do their own inspections/investigating on the property to decide if they want to purchase it.

What a seller, any seller, be it a listed property or for sale by owner, must do is supply the buyer with a NC Residential Property Disclosure Report (certain sellers are exempt, foreclosures and new constructions, mainly).  On the RPD form, a seller has 3 options for the various disclosures.  They are YES, there is/are issue(s), NO, there are not any known issues, or NO REPRESENTATION, which means "I'm not saying one way or the other."

If a seller checks YES on anything, then they must explain what it is and what, if anything, they have done to remedy the issue.  If they check NO, then they are saying that no problem exists, or ever existed, as far as they know.  This is the only instance where possible misrepresentation can occur.  If they intentionally check NO when YES would be the appropriate response.  The NO REPRESENTATION check is basically the Caveat emptor law being used.

So a seller does not have to disclose any issues, known or otherwise, on their property if they don't want.  This may or may not be the best thing to do because buyers who find something negative out on their own are much less likely to buy at all, and if they do, they'll offer a lot less.  Some problems and issues are easy for a buyer (or a home inspector) to see and be aware.  Other issues that may be of a concern for a buyer may not be as apparent during the inspections.  For example, it'd be hard for a buyer to know that the neighbor's dog howls all night long!

What many don't know is that under NC real estate law, a NC licensed real estate agent MUST disclose ALL material facts to a potential buyer that the agent is aware, whether or not the seller does.  For example, if the listing agent knows that roof leaks, but the seller checks "No representation" on the RPD form for roofs, the agent must inform all potential buyers that the roof does leak.

For sellers, I always recommend to disclose what you know.  It's simply the best way to get the best price for your home, period.

For buyers, you need to do two things.  First, hire a good real estate agent to help you with your purchase.  We do this everyday and can help you through the process.  Second, ask questions.  If something is important (material) to you, let it be known.  For example, if you're highly allergic to cats and the previous owners were cat lovers, it'll be good to let your agent know that upfront.

If you have any questions or comments, please post them here.  

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