In April of last year, my colleague, David Fowler shared a post about a seller’s obligation in a residential sale to disclose facts or conditions about the property that have a substantial impact on its value or desirability, and that are not easily observable to a buyer. As the post outlined, most of the disclosures are property specific, like the presence of mold or wood destroying organisms, or whether essential components of the home, such as the roof, plumbing or HVAC, are in disrepair. Sellers typically inform buyers of these conditions in a disclosure form usually provided by the seller’s real estate agent. There are, however, other disclosures required by Florida law that are equally as important to a buyer in making an informed decision whether to purchase a home.
Here are some of those disclosures that parties involved in the sale of a residential home should also be aware of:
Homeowners Association and Condominium Association
Florida Statute § 720.401, relative to homeowners associations, requires that a seller (or developer) present to the buyer, before the buyer signs the contract, a disclosure summary. The disclosure summary specifies, among other things,
- whether the purchaser will be obligated to be a member of the association;
- whether there are restrictions governing the use of the property;
- the amount of assessments the purchaser will be obligated to pay to the association; and,
- whether the association has the authority to place a lien on the property for the owner’s failure to pay assessments.
Importantly, the statute grants the buyer the right to void the contract up until closing if the disclosure is not provided.
Similarly, Florida Statute § 718.503, requires every contract for the resale of a condominium contain a provision that states the agreement is voidable by the buyer until closing if the buyer has not received, after buyer’s written request:
- the declaration of condominium;
- the association’s articles of incorporation, by-laws and rules; and,
- a copy of the most recent year-end financial information and frequently asked questions for the association.
Most residential contracts incorporate provisions providing for the buyer’s acknowledgement of or request for the disclosures. Because these disclosures are essential for a buyer to make an informed decision of whether to purchase a home; buyers should invariably request the disclosures at the time of contract, and should not acknowledge receipt unless the required documents have actually been received. The disclosures contain pertinent information related to: use restrictions on the property, such as lease and pet limitations; monthly assessment obligations, which are collected for, among other things, the operating costs of the association and the maintenance expenses for the common areas; and, the financial health of the association, which is reported in the year-end financial statements.
Radon Gas Warning
Florida Statute § 404.056(5) requires notification to buyers, at or prior to signing a contract for sale and purchase, of the health risks and dangers of radon gas. Radon is a tasteless, odorless and invisible gas which comes from the natural (radioactive) breakdown of uranium in soil, rock and water. It is responsible for thousands of cancer related deaths per year. Buyers should test a home while completing their due diligence, and sellers who are aware of elevated radon levels in the home should disclose it in writing to a prospective buyer.
Coastal Property Disclosure
For properties located near coastal areas, Florida Statute § 161.57 requires that a seller must provide a purchaser with a disclosure notifying the purchaser that the property is subject to coastal erosion, and that federal and state regulations provide strict coastal construction lines prohibiting or limiting construction.
Property Tax Disclosure
Florida Statute § 689.261 requires that a seller notify a buyer that the prior year’s real estate taxes are subject to readjustments and thus should not be relied upon. A seller who has owned a property for a number of years, will have benefited from a cap on annual increases in the property’s tax assessed value; thus, there could be a significant increase in the property taxes when the property is reassessed the following year. A transfer of property triggers a “reassessment” of the market value by the county property appraiser, which will serve as the basis for the initial tax assessed value for the new owner.
These are just some of the disclosures that are required in a residential real estate transaction. The assistance of a qualified real estate attorney to represent your interests in a transaction can ensure all the required disclosures have been provided or reviewed.