“Do Not Know” Residential Real Estate Sellers Disclosure

Just the other day I ran across a sellers disclosure from a property that was listed for sale. The seller had just marked one line through all the items that needed to be disclosed as “Do Not Know” and in a small memo box indicated that the seller never lived in the property.

Now let me pick this dont know apart. You as the investor who is selling your property are telling me that you don’t have any clue about what is going on with your property.

So you, as the property owner and investor, don’t know if the property is hooked up to public or private water or sewer, if the house has either gas or electric, or if it comes with heat or cooling, and you have been collecting rent for several years on a property that is not inhabitable?

Right. Please, like I am going to believe that.

When you as the investment property owner don’t know what is going on with your investment, regardless if it is close in proximity so that you can visit, or if it is in another state, you should consider something else besides real estate to invest your money.

Where ever your properties are located, close to home or out of state, you need to stay on top of things. How do you as an investor, when you have hired a property management company or contractor to help you, that you are not getting taken or that your contractor is doing what they said they are doing?

Only in a few cases will a seller not need to fill out a seller’s disclosure and being a real estate investor is not one of them.

Now let me throw something into the mix that might get a listing agents attention when they decide to accept a listing that has a sellers disclosure where the owner just marked everything “DO NOT KNOW” because they never lived in the property. When you work with a seller that is possibly withholding information by filling out their entire sellers disclosure with “DO NOT KNOW”, the seller might expose themselves to legal liability and you as the agent might be in violation of the code of ethics. A Indiana Supreme Court Ruling from June 2013 (PDF) found a seller liable because they misrepresented something on the Sellers residential sales disclosure form and just recently the Indiana Court of Appeals asked a seller to pay for damages because the seller misrepresented in the Sellers residential sales disclosure.

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