What Is A Material Fact?

 

“What Is A Material Fact? Generally, all sellers in California must provide written disclosures to buyers of residential real estate containing one to four units. Sellers will complete and sign the Transfer Disclosure Statement to make such disclosures.”

In real estate, a material fact refers to any information affecting a buyer’s decision to stay in a buy contract or the price paid for the property. There are material fact disclosure requirements for residential as well as commercial properties. A majority of states must real estate agents to disclose all material facts. Contact a Real estate attorney if you need one!

 

How do you define material facts?

A material fact must be that, a supportable fact. Property owners must remove items that detract from the value of their property or pose a danger to occupants. There is a chance of affecting the contract’s legitimacy and enforceability by this information.

 

How do material facts work?

Agents, brokers, and sellers in all states must divulge or disclose any information that could affect a property’s salability. Agents who show properties that have water damage. Even if it isn’t visible years later, notify potential buyers about the damage. Any significant water damage might make buyers reconsider their offer or whether they want to stay in the deal.

 

Types of material facts

There are many material facts, from physical flaws to less tangible ones like rumors of a ghost rattling chains in the attic.

1.     Issues with home condition and repair

Most states need disclosure of known defects in structures. Potential buyers may change their minds or change their price offer due to problems with the roof or foundation. Most lenders need home inspections and appraisals even if the agent or seller does not disclose serious defects. It’s generally impossible to hide these things.

For example, a real estate agent specializing in buyer representation showed a home to a prospective buyer. After picking up an area rug corner and discovering a major foundation crack across much of the floor in the main room, the buyer changed their mind about the buy. The seller’s or listing agent’s responsibility was to disclose this information.

 

2.     Death or murder in the home

We can use the term “emotional defect” in some states to describe this category. A property crime may include murder or homicide. Or other violent crimes that have been committed there. In the case of emotional defects, check with your state for the reporting requirements. Natural causes and suicide are possible limitations.

Even though many states do not need to report prior murders in homes, a California court determined that murders in homes are not material facts to disclose. If you are aware that a murder took place in the home, make sure you check your state’s laws. Contrary to popular belief, a California court ruled in favor of a buyer who did not know about murders in a purchased home.

The disclosure of violent deaths is sometimes necessary, even if they weren’t technically considered murders. Defending a home from an intruder would be an example of self-defense.

 

3.     Haunted houses

Many states do not consider ghosts, hauntings, and paranormal activity material facts. A part of the backyard may have been set aside by a previous owner for their departed pets. Or the property might be near an ancient burial site. Uncertainty about what should be open/disclosed is sometimes it is best to disclose without researching.

 

4.     Animals as material facts

Depending on the state, sellers must disclose if the property has problems with animals or pests. Several issues to consider when selling your home include bee swarms, scorpions, and rabid animals. But you must also consider other issues. There can be concerns about animals in the neighborhood. Whether a neighbor’s dog barks or a neighbor is raising chickens.

There was a case in Iowa where a brokerage had to pay damages for failing to disclose to buyers. That there was an HOA restriction of one dog per house. Upon finding out, the buyers canceled the deal. Seasonal issues caused the house to remain on the market for a long. And the original buyer’s offer fell short.

 

What must the information be open/disclosed?

California law requires that all material facts affecting the value or desirability of the property be open/ disclosed to the buyer. There is no specific definition or rule about what forms a material fact. Whether an undisclosed fact was material would depend on the circumstances of each case. Generally, a fact is to think about the material if it affects the property’s value in a significant and measurable way. In general, if the seller failed to disclose an unknown fact to the buyer, the buyer would be prohibited from purchasing the property.

A seller must disclose any material facts relevant to the sale of the house. Including structural issues, soil issues, a leaking roof, unpermitted construction, and noise problems in the neighborhood. And anything else a buyer may consider relevant. A seller should disclose any material facts if there is any doubt about it. Whether they need to be open/disclosed to be safe/protected from claims that they deliberately concealed the fact.

 

When should the disclosure be done?

To ensure that the buyer can make an informed decision, disclosures should be given to the buyer as soon as possible. Identifying this fact earlier will enable the seller to relist the property if the buyer cancels the transaction due to the disclosure. Under the Residential Sales Agreement of the California Association of Realtors, all disclosures must be given/provided by the seller within seven days after the sale agreement is accepted.

Often, sellers prepare all disclosure documents before listing their property to be ready to present everything the buyer requests as soon as the offer is actively accepted. A buyer has five days from the date he receives a late disclosure to cancel the sales transaction even after he waives all sale contingencies. Depending on the contract, the cancellation period may vary. It would thus be beneficial for the seller if they were to provide disclosures as soon as possible after accepting the offer.

 

Does the seller have to disclose when we sell the property “AS-IS”?

Yes, of course. Sellers believe disclosures are unnecessary if the buyer agrees to sell the property “as-is.” When an “as-is” sale occurs, the buyer accepts the visible defects in the property. As-is sales do not excuse sellers from disclosing material facts or conditions that are not clear. Generally, structural or soil problems are not clear to the average person.

The seller must disclose these problems to the buyer regardless of the “as-is” sale. In an “as-is” sale, it is safer to disclose visible problems in the disclosure to avoid the possibility of a dispute about whether the problem was visible. The buyer, for example, may claim that a rug or furniture before covered a defect on the floor and thus was not visible before the seller moved out.

 

Is it necessary for a seller to disclose a repaired defect?

As per the law, it’s unclear if the seller has to divulge a primary defect that has been completely fixed. According to court rulings that the buyer would not have suffered any harm if the seller had revealed the defect in the first place, and neither party should make the seller accountable. A court decided that even if the seller believed the property was in good repair. We need the seller to reveal previous mudslides. Also, how sure can the seller be that the issue was properly repaired and not required to disclose it? The seller who believes the defect was repaired could be at risk of repeat failures because they aren’t contractors or engineers. The seller should be able to inform the buyer about any defects believed to have been completely repaired under these conditions.

 

Death in property

You do not have to disclose as long as the prior occupant died more than three years before the current potential buyer’s offer. Whether the previous occupant had Acquired Immune Deficiency Syndrome (AIDS). Despite this, you must still answer if a buyer asks whether anyone has died at the property.

 

Can an individual seller be held accountable for failing to divulge certain details?

It is the right buyer to cancel the sale if a required disclosure is not made timely. The seller may be responsible for the cost of repairs and any other damages resulting from an undisclosed defect if the disclosures are not made at all. The court could also order the seller to take back the property and reimburse the buyer for the sale price and other damages. The seller can be responsible for the buyer’s attorney’s fees. A seller may also be liable for punitive damages if they intentionally concealed a material disclosure.

Considering the potential consequences of failing to disclose, sellers should take their disclosure duties very. After making the required disclosures, the seller will not only avoid the potential legal and monetary consequences but also have peace of mind. If the buyer discovers the problem or could have discovered it, they can sue the seller for fraud and concealment within three years.

Disclosure of all legally required information is better than worrying about a potential lawsuit for three years. Sometimes, what a seller considers a serious defect may not be as important to a buyer. Or, the buyer can negotiate a repair credit during escrow to address the defect. If there are any disclosure questions about the property. And if any settlements need documents with the buyer, sellers should consult an experienced real estate attorney.

 

Plaintiff & defendant trial goals

As a lawyer representing either side in a misrepresentation of material fact case in California, you will have different goals at trial. Your goal as the plaintiff will be to prove that the defendant intentionally hid the material fact. The defendant can claim that the plaintiff already knew the material fact. That it was unknown to both parties or that they caused the “material fact” themselves.

It is sometimes easy to detect misrepresentation of material facts. As an example, let’s look at a real estate law situation. The basement of a house could inundate with serious water intrusion for many months. The long-time owner covers the rotting wood before selling the house with thin wood panels.

Despite knowing about the issue, the seller sells the home without informing the buyer. As soon as the buyer moves in, he discovers that the paneling is not the original. Photo documentation of the damage and hiring a home inspector would provide enough evidence for the seller to be guilty in court. The intent isn’t so obvious. The plaintiff must prove that the seller (defendant) intentionally misled them in their best interest in these cases.

 

Benefits of Hiring an Attorney

Plaintiffs may choose to try the case on their own if the damages resulting from the material misrepresentation exceed the value lost. Hiring an attorney is worth it when presenting a case worth more than $25,000. As a defendant, this is especially true if the damages are great.

As the plaintiff, you may be able to sue for damages and attorney fees due to the value difference. Even if the sale overturns, you can sue for restitution of your money, attorney fees, and other damages.

An attorney has expertise in law, and they can present evidence in a way that shows its validity of it during your trial. In the plaintiff’s case, you might have bought something with defects that left you out of pocket. Protect yourself and your sale assets from any claims for damages brought against you as the defendant. The ultimate defense against trial losses is to have an attorney on your side.

 

Do you need an attorney for material misrepresentation?

What Is A Material Fact? We can assist you in any legal matter, whether you are a plaintiff or a defendant. As attorneys in misrepresenting material facts cases. Our firm has extensive experience dealing with business and real estate litigation. We will be happy to assist you if you need help assessing your case.

The Attorney Real Estate Group specializes in cases that California Law governs. It includes business and real estate litigation. An expert attorney on your side will make it easier for you to prevail in your case. Do not be afraid to reach us whenever you believe that legal representation is essential.