Home sellers now must list latent defects


October 16, 2005

Readers often ask what protections they have against problems in a house they bought that are not apparent or don't turn up in a home inspection.

Until this month, the general answer in Maryland was "Not much."

But now a new state law requires sellers of single-family residences to disclose "latent defects" of which they are aware that threaten the health or safety of the purchaser or an occupant.

The new law, which took effect Oct. 1, represents a modest inroad on the long-standing common-law principle of caveat emptor - buyer beware. It amends a provision of the Maryland Real Estate Code, which requires a seller of a single-family residential real property to complete and deliver to each purchaser either a written property condition disclosure statement or a written disclaimer that the seller makes no representations or warranties as to the condition of the property, except as is expressly stated in the contract of sale. Now, the disclosure or disclaimer form must advise purchasers about "latent defects" of which the seller has actual knowledge. Latent defects are defined as those "that a purchaser would not reasonably be expected to ascertain by a careful visual inspection" and "that would pose a direct threat to the health or safety of the purchaser or occupant."

The law, which applies only to exisiting homes, does not list any specific conditions that constitute a latent defect. Some problems that may constitute latent defects include hidden termite or structural damage, mold or mildew behind walls or under floor coverings, and unsafe heating equipment or electrical wiring. Courts will have to determine, on a case-by-case basis, whether a particular defect is latent, whether it poses a direct threat to health or safety, and whether the seller knew about the dangerous condition.

A real estate licensee representing a seller as the listing broker has a duty to inform the seller of the seller's duty to disclose latent defects, as required by the new law. Sellers won't be able to avoid disclosing dangerous latent defects they know about. Real estate licensees also have a duty to disclose material property defects of which they have knowledge.

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