Pursuant to Ohio law, sellers in most residential real estate transactions are required to provide the buyers with a disclosure form. Ohio Revised Code §5302.30 states disclosure forms are required in “any transfer of residential real property that occurs on or after July 1, 1993.” The statute also applies to installment contracts, leases with options to purchase, and renewable leases with ninety-nine-year terms.
Typically, this statute is limited to traditional real estate transactions between buyer and seller. It does not apply to commercial properties, foreclosures, a transfer pursuant to a court order, or to homes that have not yet been lived in.
The form is designed for the seller to be able to disclose “material matters relating to the physical condition of the property to be transferred, including, but not limited to, the source of water supply to the property; the nature of the sewer system serving the property; the condition of the structure of the property, including the roof, foundation, walls, and floors; the presence of hazardous materials or substances, including lead-based paint, asbestos, urea-formaldehyde foam insulation, and radon gas; and any material defects in the property that are within the actual knowledge of the [seller].” R.C. §5302.30(D)(1). Thus, a seller may be liable in a subsequent lawsuit alleging latent defects by the buyer if the seller fails disclose what is reasonably known to them at the time of sale.
When is the seller liable for failure to disclose a defect?
§5302.30 applies to “latent defects,” with are issues that would not be obvious or easily found by the buyer during a walkthrough or inspection. Examples of latent defects are foundation issues, flooding, mold, and septic tank issues. These are the types of issues that would only likely be known to someone who has lived in the property and not found simply by walking through the property.
In Ohio, a buyer must prove that the seller had knowledge of a defect in order to be successful in a real estate disclosure lawsuit. Furthermore, the applicable law provides that a seller is “not liable in damages in a civil action for injury, death, or loss to person or property that allegedly arises from any error in, inaccuracy of, or omission of any item of information required to be disclosed in the property disclosure form if the error, inaccuracy, or omission was not within the transferor’s actual knowledge.” Claims are also subject to a statute of limitations, meaning a buyer has a limited amount of time to file a lawsuit for failure to disclose a latent defect. Some Ohio courts have held that the statute of limitations begins at the time you discovered or should have discovered the defect upon taking possession of a home. Because it can be difficult to prove the actual knowledge of a seller, and because there is a statute of limitations, it is important that you speak with an attorney as soon as possible after discovering a defect you feel should have been disclosed by the seller.
If you are selling residential real property, it is important that you are aware of the disclosure form and what is required to be disclosed by you. Furthermore, Ohio Revised Code §5302.30 is still applicable to sellers that sell “as is.” Consulting with an attorney prior to the sale of property can help you to avoid potential liability after the transfer of the property.
