PROPERTY CONDITION DISCLOSURE FORMS: HOW THE REAL ESTATE INDUSTRY EASED THE TRANSITION FROM CAVEAT EMPTOR TO "SELLER TELL ALL"

Real Property, Probate and Trust Journal, Summer 2004 by Lefcoe, George

VII. CONCLUSION

Common-law courts changed the law of seller disclosure from caveat emptor to "seller tell all." This amorphous, court-imposed disclosure requirement invited fact-laden trials with unpredictable outcomes, as litigators wrestled over what information was material, latent, known to the seller, and inaccessible to the buyer.

Courts then began holding brokers jointly and severally accountable to buyers who were injured by seller misrepresentations. To cut back on their own expanding liability, to assist buyers to become fully informed about a property before committing to a purchase, and to clarify for sellers exactly what they should disclose, Realtors developed a disclosure protocol now in place throughout the country. Sellers are given no practical choice but to fill out a detailed property condition disclosure form for the benefit of prospective buyers. As the Realtors anticipated, buyers who receive these reports are less likely to be disappointed with their home purchases afterward, and are also less likely to file insurance claims and lawsuits against sellers or brokers for undisclosed defects.

Realtors have assumed the primary responsibility for revising disclosure questionnaires to keep current with evolving buyer concerns, court decisions, and new laws and regulations. Realtors translate sometimes confusing and obscure norms into simple "yes" or "no" questions that sellers answer in completing disclosure forms. In this way, the real estate industry has eased the transition from caveat emptor to "seller tell all."

George Lefcoe*

* Florine and Ervin Yoder Professor of Real Estate Law, University of Southern California. I am grateful for the skillful, resourceful, and tireless research assistance of Robert Cooper, the editorial assistance of Victoria B. Naidorf, Vice President and Brokerage Counsel, Coldwell Banker, Northern California, and the useful suggestions of my colleague, Mike Guttentag.