Material Fact Real Estate

Attorneys Real Estate Group

We Handle Real Estate Contracts, Builder Disputes, Failure To Disclose & More..

As a real estate buyer, seller, broker, and agent, you should know the term material fact real estate. A material fact in real estate is a serious and very important terminology that could severely affect any decision about the property. In this article, find a comprehensive approach to understanding the term’ material fact real estate. Also, learn how our real estate lawyers at Attorneys Real Estate Group can help you in matters related to it.”

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Material Fact Real Estate

In every real estate transaction, whether for buying, selling, or leasing, it is mandatory to establish certain things in the beginning. Things could necessarily and materially affect the feasibility of any interest that any party to a real estate transaction has or will have in the future.

The term’ material fact real estate is a preliminary matter that can severely impact a real estate transaction. This article comprehensively guides you on what you need to know about dealing with material facts in real estate transactions.


What is the material fact of real estate?

What is material fact/material fact definition? The term’ material fact real estate’ means a fact that, if known to a real estate buyer, may cause him to alter his decision concerning how he wants to pursue a real estate transaction further. Material facts tend to be important for both residential and commercial nature properties and can significantly impact their transaction. From a wider perspective, a material fact is a fact that could affect a real estate transaction in three ways, namely –

  1. Cause a change to the value of the property,
  2. Causes the buyer or tenant to reconsider their decision to buy or rent the property in question and
  3. Reevaluate their rental or purchase price offer.

Any change in any one or all of the above instances is based on the material fact that the buyer or tenant –

  • I was previously unaware of, and
  • Now is aware of either fully or partially but in substantial amounts with the knowledge that could necessarily cause him to reconsider the terms of the real estate transaction and its impact on his interest.

Generally, any fact that could become a subject of real estate price change is deemed a material fact. The other two factors above are an extension of the first one.


An important thing to remember – About material facts about real estate and this article

Although material fact forms an integral part of all real estate transactions, whether because of buy-sell or tenancy agreement, our focus and way of reference would, in most cases, reflect real estate buy-sell transactions; however, if any section of this article remains unclear and you want legal counselling, call us.

You only need to book a free consultation with Attorneys Real Estate Group lawyers. Our real estate attorneys near me at Attorneys Real Estate Group are highly competent and would gladly help. We can help you understand various matters and navigate any material fact real estate issues.


Understanding the term’ material fact real estate’ – A comprehensive approach


How does material fact real estate work? – Obligation to disclose by whom

What is a material fact in real estate? The working principle of material fact real estate is simple for both the buyer and the seller. In any real estate transaction, a property buyer has certain rights which describe a seller’s duties. Among a few others, one such important obligation of the seller is to disclose material facts regarding the property being sold. This means that the buyer has the right to know every piece of information that –

  • could not just assist him in making the right decision,
  • but also help him reconsider his decision if any uncertain circumstances prevail or an unusual event occurs.

Moreover, besides the mandatory obligation of the seller to disclose material facts of real estate, the agent or broker involved in a real estate transaction is also obligated to disclose any important fact in his knowledge.


What kind of material fact does real estate need to be disclosed? – Past, Current, and Recurring

What is material fact in real estate? The simple answer is that all real estate facts must be disclosed to the buyer. This means that the seller and the agent or broker involved should disclose any information that could be presumed to be material or essential for the buyer to make the right decision. However, a seller, agent, or broker may intentionally or unintentionally abstain from disclosing a fact that –

  • is old and relates to the past,
  • no longer exists, and
  • has been taken care of, for example, a leak in the roof being fixed many years back before the sale.

Without considering the above factors, the real estate buyer still has the right to become aware of all material facts. For example, if an agent or broker is aware of any past defect in a property that used to exist but is no longer present, he should still disclose it to the buyer.


How important is a material fact in real estate?

What is a material fact? Besides being important, material facts such as real estate must require real estate disclosure in many states in America. A seller, buyer, agent, or real estate broker should know what must be disclosed. It is also important for these parties to understand the legality, extent, and impact of a material fact real estate on their interest, rights, and duties. Still, if any party has doubts in their limited capacity, it is recommended that they seek legal counseling.

Since it is possible that what can be taken as material fact real estate for one property may have different applicability on another, taking legal advice becomes highly important. A real estate lawyer near me can explore your case and advise each party on the most appropriate options. In this way, each party adheres to its obligated role while minimizing the chances of any adverse consequence resulting from an unforeseen event.


Important real estate disclosures that a seller must provide to the buyer

If you are a real estate seller and are between an ongoing transaction to sell a property, this section will surely help you. Here is a list of 8 important disclosures that a seller must provide to a real estate buyer –


Important real estate disclosures


1. Neighborhood troubles in the form of nuisances

A neighbourhood nuisance relates to a troubling and disturbing noise in the adjacent blocks or vicinity of the property. This could cause trouble and interference with the normal household routine of the occupants of the property. Besides unwanted noise, nuisance includes odours and smells, whether pleasant or unpleasant but irritating, appearing from the neighbourhood. The causes of such nuisance include landfill sites, farmhouses, shooting ranges, exploration sites, airports, etc. Different states require different modes of disclosure in this case.


2. Any death that happened on the property

It is not uncommon for certain people to be uncomfortable with anyone’s death or become superstitious. Whether or not anyone dying on the property being sold should be disclosed depends on what your state requires. For example, certain states do not require disclosing deaths from natural, suicidal, or accidental causes.

Still, deaths from violent crimes or murder may need to be reported. Similarly, a person’s death resulting from a fault in the property, which was later remedied, may still need disclosure. Therefore, for better understanding and disclosure requirements in your case, consult a real estate attorney.


3. Risks of any hazards

Certain states require seller disclosures to inform the buyer of any hazards that existed or exist on the property. For example, the risk of natural disasters like:

  • Floods,
  • Earthquakes,
  • Tornados,
  • Cyclones,
  • Heavy rainfall,
  • Or even wildfires.

Similarly, any environmental contamination or the use or presence of any toxic or harmful substance, such as lead-based paint or radon gas, must also be disclosed. In certain circumstances, some states may also require sellers to disclose information relating to the previous use of the property for any commercial or manufacturing purpose. Such commercial or manufacturing activity may have used hazardous or harmful substances.


4. Information related to any Homeowners’ Association

If the property being sold falls under the governance of a Homeowner’s association, this fact is material and requires disclosure. The Homeowner’s Association normally charges monthly fees and regulates certain membership rules for member homeowners. These things may or may not be interesting for the incoming occupant or the new buyer of the property. Thus, this information is a material fact of real estate that requires disclosure.


5. Any damages resulting from water

While water is an essential ingredient for survival, it can cause severe destruction if it gets inside a property. Water from flooding, rain, or pipe leakage can damage the structure and create mold hazards. This information, too, falls under the adverse material fact premise and must be disclosed.


6. Repairs are done on the property

It is also not uncommon for long-residing property occupants to have undergone certain repairs at some point. In such a case, sellers need to disclose the repair history of the property as well. This is because repair history has various aspects, all of which tend to be material. For example, the existence of any past faults and subsequent repairs may form the reason for a fault in the future and subsequent repair. Examples of common repairs that may need to be disclosed include – soil movement, fault lines, and any roof malfunctioning in the walls, fences, flooring, etc.


7. Items not found or found to be missing by the new buyer

It is also possible that the new buyer of the house may not find some things that he otherwise assumed to have gotten with the property. This can create confusion and disputes between the seller, buyer, agent, or broker. Some states require sellers to mention complete details regarding this issue to prevent miscommunication. Such details include a list of items the seller intends to leave in the property for the new buyer. This eventually helps clear any doubts and assumptions of the buyer.


8. Other disclosures

Although a detailed discussion of this can be found in the next sections related to the “TDS” form, it is also important to highlight it here. Sellers should also make’ Other Disclosures’ apart from any known or explicitly required disclosure requirements. These disclosures should mention information that could be termed as a material fact.


Mode of disclosing material fact real estate – When and how?

As mentioned earlier, material facts, such as real estate, aren’t just important but also a requirement in many states. For example, the California Legislature, beyond making material fact real estate disclosures a must requirement, requires additional steps. This includes introducing a properly drafted standard form for this purpose. This form is titled the “Transfer Disclosure Statement” or the “TDS.”

The “Transfer Disclosure Statement” or “TDS” must be filled out as a document for every seller of real estate. A real estate seller must fill in the ‘TDS’ form with true information to their knowledge. This form then is to be furnished to the respective buyer before a real estate property may be sold. Besides the applicable ‘TDS’ form regulated by the California Legislature, other states in America also have similar forms and requirements.

Again, if you aren’t aware of what the material facts real estate laws in your state prescribe you to do, you should always consult a real estate attorney near me. Remember that since there is no exception for a real estate seller to avoid providing the ‘TDS’ form or any other similar form for this purpose to the buyer, taking the help of a real estate lawyer near me can help you in two ways.

  • First, you get guidance in filling out the form. This ensures that only important information is mentioned and uses words with limited and correct interpretation.
  • Second, you do not disclose any unneeded or extra information, and that too in an incorrect section of the form.


Is the “Transfer Disclosure Statement” or similar other forms enough as a disclosure of all important information?

Another way of asking the above question is if the information furnished through a “Transfer Disclosure Statement” or “TDS” form can be deemed conclusive evidence that the seller has conveyed all the necessary information to the buyer. Well, the answer to this question is a straight ‘No.’ Irrespective of providing material fact real estate disclosures to the buyer by way of ‘TDS’ or any other similar form, it might not still be enough.

This means there is a high possibility that any disclosure form such as a “TDS” may not explicitly ask for any information that may otherwise be a material fact. However, this does not exempt a real estate seller from concealing such material facts for which no section appears on the disclosure form. Remember that a real estate seller must disclose all material facts besides an agent and broker.

This obligation still stands irrespective of the manner in which to disclose it. Therefore, any fact that could be taken as material in real estate requires disclosure, with and under no exceptional circumstances. For example, besides the “TDS” form promulgated by the California Legislature, the California Association of Realtors prescribes a further course of action. They have developed another form, known as the “Seller Property Questionnaire” or “SPQ,” as an add-on to the “TDS.”

The “SPQ” form functions as a supplementary document and contains topics for material fact disclosure in addition to the “TDS.” Moreover, it allows the seller to mention further information that may be a material fact voluntarily. This way, real estate sellers in California can disclose information beyond the apparent scope of the “TDS” and “SPQ.”


What happens when a seller does not disclose material facts about real estate?

When a seller or even a landlord and their real estate agent and broker fail or intentionally conceal any material fact from the buyer, that person commits real estate fraud. In such a case, when the buyer subsequently discovers concealment of material fact real estate and suffers from a loss or damage.

As a result, he can initiate legal proceedings against the seller. The court presiding over the trial of real estate fraud will decide the outcome based on the severity of the case. The probable outcome in such cases is awarding the buyer compensation by imposing severe liabilities and monetary fines on the seller and the agent.

The nature of such compensation should be to help put the buyer in the position he would have been in had he known all the material facts in the first place and moved with the right decision. The extent of such compensation may also cover his legal expenses incurred because of the current litigation.


Why hire a real estate attorney near me in material fact real estate situations?


Importance of hiring a real estate lawyer near me in material fact real estate cases

Real estate transactions involve technical procedures and complex situations. Therefore, knowing what constitutes a material fact in real estate is very important for each party involved. For a buyer, it is his right to access all the important information that counts as a material fact. This will eventually help him move in the right direction and escape any otherwise avoidable and negatively impacting situations. Similarly, disclosing material facts at the right time and in the correct mode is also very important for a seller.

This will save him from facing any unusual liabilities or possible litigation initiated by the buyer in the future. The same case of the seller applies to the agent, although to a different extent. Initiating legal proceedings to claim and recover damages is normal behavior when the seller doesn’t disclose material facts.

This happens when a buyer discovers a previously concealed material fact that could otherwise have altered his decision to buy. But remember that all this trouble can be prevented by making the right decision at the right time. And this brings us to recommend a real estate lawyer near me in a complex yet easily avoidable material fact real estate situations.


Lawyers and attorneys near me deal with material fact real estate.

If you, as a real estate seller or buyer, are having trouble ascertaining what information should be regarded as a material fact, we are here to help. Attorneys Real Estate Group has years of experience dealing with complex real estate situations.

Based on our expertise and team of professionally competent lawyers, we can confidently handle any technicalities in a real estate transaction. Our team of expert real estate attorneys at Attorneys Real Estate Group can guide you if any of the underlying facts in your case require disclosure and to what extent.

We look forward to welcoming you soon.

Hedy Ghavidel

HEDY GHAVIDEL Managing Attorney  Roseville Office  1-866-471-6981  Bio...

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