What Happens When Home Sellers Fail to Disclose Defects in Maryland?

When you sell a real estate property in Maryland, you are required by law to make certain disclosures about its physical condition to the buyer. There are statutes in place which require you to disclose what are called ‘latent defects’ to the buyer. Failing to do so can open you up to lawsuits from the buyer later on.

Real Estate Disclosure Laws in Maryland

When it comes to selling a real estate property in Maryland, you generally have two choices:

  1. You can choose to sell your property on an ‘as-is’ basis and file a disclaimer stating that you do not make any representations or warranties with respect to its condition.     
  2. You can choose to disclose the defects in your property to the buyer by filling out a questionnaire.

Choosing the Disclaimer Option

The most important thing you need to know about the disclaimer option is that it does not allow you to sell a home without disclosing any details to the buyer. Section 10-702 of Maryland’s Real Property Article states that a seller must disclose the latent defects in their property to the buyer.

Latent defects, in this context, refer to the kind of defects that the buyer might not be able to spot during an inspection. For example, if there is a problem with your roof and if the contractor tells you that it needs extensive repairs or if it needs to be replaced altogether, you are required to disclose it to the buyer, even if you file a disclaimer. Failing to do so is not only a breach of your duty as the seller, it is also against the law.

Choosing the Disclosure Option

If you choose the disclosure option, you need to fill out a form which contains a variety of different questions about your property – structural defects, repairs done in the past, presence of hazardous materials, presence of pest infestations, zoning and building code violations, and many more. All you need to do is answer ‘yes’ or ‘no’.

The form has a pretty extensive list of questions, which is likely to cover all the possible defects in your property. If there are any defects in your property that are not covered under the questions, you can add your own comments as well.

Under What Circumstances Can the Buyer Sue You?

The buyer might be able to hold you liable for the defects in the property under the following circumstances:

  • If you rate a particular feature in your property as being in a much better condition than it actually is, and if it breaks down soon after the buyer moves in
  • If you fail to mention a latent defect, despite being aware of it
  • If you deliberately misrepresent, withhold information, or outright lie about a material defect in your property

In the aforementioned scenarios, the buyer can accuse you of not disclosing the defects in your property, file a lawsuit against you, and seek damages to cover the cost of repairs and replacements.

It should be noted that you can be held liable only for defects that you knew of or should have known about at the time of selling the property. You are not expected to be aware of and disclose every minor or unknown defect in your property.

The buyer might be able to recover damages from you only if the defects you failed to disclose are serious and/or pose a threat to the health and wellbeing to the buyer and their family.

For example, if there is a major problem with your HVAC system and if it needs to be replaced entirely, you should definitely inform the buyer of the same – even if you file a disclaimer – since it is the kind of defect that can influence the buyer’s decision.

Upon being told about the defect, the buyer might ask you to fix it as part of the contingencies that need to be fulfilled before the closing or ask you to lower the price. So, failing to disclose such a defect might result in financial losses to the buyer, in which case they might be able to take legal action against you and seek damages.

Real Estate Lawyers in Maryland

The real estate attorneys at the Law Offices of Matthew S. Evans III LLC are well versed with the federal, state, and local regulations regarding real estate transactions.

If you are planning to sell a property, we can tell you what you need to and need not disclose to the buyer, review all the documents related to the transaction, and oversee the whole process to make sure that your rights and interests as a seller are protected.

You can contact our real estate attorneys at (410) 626-6009 for a free consultation.