You were touched that your grandmother left her house to you, but you had no intention of moving into it. Instead, you sold it, and you were grateful to have the money. Now you find yourself being sued by the buyer for failure to disclose defects to the property. How could this be? You never lived there and had no idea there was anything wrong with the house.
You Fall Into One of Ohio’s Exemption Categories
Under Ohio law, sellers have to fill out an extensive disclosure form to let potential buyers know about any problems with the house. The Residential Property Disclosure Form lists every area of the house and every mechanical system in it and requires the seller to sign off on each one, indicating that it is in good condition or disclosing that it is in disrepair. However, certain types of property transfers—including an inheritance—are exempt from disclosure. In general, these are transfers in which the seller has no way of knowing what’s wrong with the property. Included in these exemptions are the following:
- Court-ordered transfer. The most common scenario for this exemption is a divorce where one party is ordered to sign the house over to the other. Because the spouse who is taking over ownership of the house has already lived there, the transferring spouse does not have to fill out a disclosure form.
- Foreclosure action. When a house has been through foreclosure and a financial institution is selling the property, a disclosure form does not have to be filled out. A bank or other entity cannot be expected to be familiar with property defects.
- Transfer by an executor or trustee. The executor of an estate or trustee of a trust might sell a house according to the instructions they have been given. Since the agent never lived in the house—and potentially has never even seen the house—they do not have to file a disclosure form.
- New construction. Transfer of a newly built house that has never been lived in does not require a disclosure form, whether it is the builder or some other party who is selling the property. This does not eliminate the builder’s responsibility for poor quality construction, but that would be a legal action unrelated to the Residential Property Disclosure Form.
- Transfer to a buyer who lived in the house. If you are selling a house to someone who has lived in it for at least a year, you do not have to fill out a disclosure form as it is assumed that the occupant should already be aware of any problems. The occupant could be a renter, family member, or land-contract holder.
- Transfer by an owner who inherited the house and did not live in it. As in our opening example, if you inherited a house and did not live in it within one year prior to the sale, you are not liable for disclosing defects. Even if you lived in the house as a child many years ago, you are still exempt from the disclosure.
- Transfer by a government entity. If the owner of the house or the party buying the house is a government entity, there is no need for disclosure. For example, if a county or school district is buying or selling the property, a Residential Property Disclosure Form is not required.
In these kinds of property transfers, it is up to the buyer to conduct a thorough inspection of the property to identify any problems on their own.
Why Am I Being Sued?
If you fall into one of these categories—or have another reason to believe you did not have to disclose a property defect—and are still being sued for non-disclosure by the buyer, you are probably the victim of a misinformed buyer’s Realtor or overzealous real estate attorney hoping to cash in. As a real estate litigator, I would be happy to take a look at your case and defend you against an unjust legal action. You should not have to pay for something you were not responsible for. Contact the real estate litigation team at Littlejohn Law today.