Disclosure law mystifies market

May 01, 1994|By Adriane B. Miller | Adriane B. Miller,Special to The Sun

Four months after the seller disclosure law went into effect, there is still confusion among buyers, sellers, their agents and even their lawyers.

The legislation, which the General Assembly passed last year, was designed to hold sellers responsible if they knowingly sell a home with an inconspicuous but serious defect. The law, which applies to residential property resales, requires sellers to give prospective buyers a written disclosure form describing their property's condition. Or, sellers may sign a disclaimer sheet that says they sell the property "as is," with no explanation of hidden problems the buyer may find later.

And there's the rub. Offering sellers a way out of their responsibility to disclose defects defeats the purpose of the law, some agents and buyers say, which was to disclose problems before settlement.

"It brought about a funny opportunity of responsibility to a seller, but at the same time it says, 'if you don't want to say anything, here's what you do,' " said James Turner, a broker with Chesapeake Bay Realty Inc. in Perry Hall. About one-quarter of his agency's clients are using the disclaimer, Mr. Turner said.

Complaints about the disclosure law come from sellers, too. They say they are confused about which form they should use -- disclosure or disclaimer -- for the most legal protection. Faced with ambiguity, many sellers are opting to take what looks like the safest course of action: signing the disclaimer.

"That kind of defeats the whole purpose of disclosure," said Barbara Logan, an agent with Coldwell Banker Grempler Realty Inc. in Bel Air.

Residential real estate lawyers are split on which form they recommend to sellers.

"Sellers' attorneys are advising sellers to sign a disclaimer. Buyers' attorneys are advising buyers not to buy a house without a disclosure. We have deadlock," said Ed Garono, an agent who works with Ms. Logan.

"The last contract I had took two days to get worked out," Mr. Garono said, because neither party accepted the other's disclosure conditions. In the end, the buyer accepted the seller's disclaimer but only after the seller filled out a disclosure form with the words 'for informational purposes only' printed boldly across the top."

Benjamin F. Riggs Jr., a residential real estate attorney with Alderman DeMeo & Riggs in Towson, said sellers may be liable for problems that come up after settlement if they fill out a disclosure form.

"If you know there are problems with the house, I would lean toward selling 'as is' " with a disclaimer, Mr. Riggs said.

Stuart Blatt, a real estate attorney with Blatt & Rosenberg-Blatt in Baltimore, has a different opinion.

"If a seller doesn't give disclosure, a willing buyer isn't going to want the property," Mr. Blatt said. He recommends sellers have their property professionally inspected and use the disclosure form.

But Maxine Murray, a Bel Air resident who is selling her home, has a feeling that the disclosure form she completed is limiting the number of serious inquiries about her property.

"Buyers want sellers to be responsible for everything," Mrs. Murray complained. "If they see a disclosure they back off."

Disclaimers make other buyers suspicious. One Baltimore-area couple looking for a home, who did not want to be named, said the disclaimer makes it too easy for sellers to keep mum about potential problems on the property. Buyers, the couple said, have to search for glitches while the seller waits to see what they find.

The Maryland Association of Realtors in Annapolis has heard an earful of complaints about the law from agents, buyers and sellers. Nonetheless, Arthur Davis III, the association's president, believes in it.

"The disclosure package, while new and perhaps a bit overwhelming, was designed to reflect changes in consumer attitudes and the changing marketplace," Mr. Davis said. "The law benefits both buyers and sellers."

William Cassidy, a Long & Foster Realtor in Baltimore, agreed. "I have heard so often from sellers, 'This is just the kind of information I wish I had when I was buying.' "

He does admit that choosing which form to fill out can be confusing to a seller. "I come across a seller now and then who isn't quite sure what direction to take," Mr. Cassidy said. "We say, maybe you should sit down with someone, a family member or a trusted friend, and talk about it with them."

Hiring a lawyer just to help them choose a disclaimer or disclosure form and fill it out, he said, is not necessary. Even the lawyers agree with that. "Overkill," said Mr. Blatt.

Roy Grant, another Realtor with Long & Foster in Catonsville, said sellers shouldn't have any future liability problems as long as they answer questions on the disclosure form honestly.

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