If you're considering buying or selling a home in Tennessee, it's essential to understand the basics of Tennessee property disclosure law. The Tennessee Residential Property Disclosure Act (Tenn. Code Ann. 66-5-201, et. seq.) mandates that sellers provide buyers with a Property Disclosure Statement. However, despite this law, there is still a significant amount of civil litigation that arises from defects discovered in homes after buyers have already moved in. To better navigate Tennessee real estate property disclosure law, here are the top 8 things you should know:
Tennessee Property Disclosure Law
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Sellers are required to disclose the condition of the home, including any "material defects." What does "material" mean? In general, it refers to any fact or condition that might influence a buyer's decision to purchase the home.
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Sellers are only obligated to disclose based on the information they possess. Sellers are not required to have a home inspection, hire experts, or conduct an independent investigation to uncover potential issues with their properties.
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The Disclosure Statement is not a warranty. It's crucial to understand that the disclosure form does not replace a comprehensive home inspection. If you're the buyer, it's essential to hire your own home inspector and not solely rely on the disclosure form.
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Certain sellers are exempt from making disclosures. Common exceptions include sales or transfers between co-owners, new construction, purchases from lenders after foreclosure, auction sales, or situations where the seller has not lived in the home within the three years preceding the closing.
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Sellers are NOT required to repair items listed in the Disclosure. As a buyer, it's essential to be aware that sellers are not obliged to fix anything listed as broken or defective in the disclosure. If you want an item repaired, it must be contracted separately. In other words, both the buyer and seller must agree in the final contract that the seller will repair the item before closing.
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Sellers ARE required to update their disclosures before closing. Sellers must provide updates to address any significant changes that have occurred since the original disclosure or to confirm that the original form remains accurate. If you're the buyer, you should not close on a home without seeing an updated Disclosure Form signed and dated by the seller.
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Representations in the Disclosure Form involve the seller only, not the real estate agents. The Disclosure Act exclusively applies to sellers. Real estate agents cannot be sued under the Disclosure Act for information contained in a seller's disclosure form unless they are signatories. However, real estate agents have specific disclosure duties under the Tennessee Real Estate Broker License Act of 1973. They are required to disclose any "adverse facts" of which they have actual notice or knowledge. Adverse facts are conditions or occurrences that significantly impact the structural integrity of a property or pose significant health risks to its occupants. Adverse facts may also include conditions or occurrences that have a negative impact on the value of the real estate.
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Any lawsuit against a seller for misrepresentation in a Disclosure Statement must be filed within one year. Any cause of action based directly on the disclosure law statutes will be lost if not filed within one year from the date the buyer received the disclosure statement or the date of closing or occupancy, whichever comes first.
Discovered a Problem After Closing?
If you encounter issues with your new home and suspect that the seller or a real estate agent made a misrepresentation, it's crucial to consult with an attorney as soon as possible. While a lawsuit may not always be necessary to resolve a legal issue, it's important to be mindful of the deadlines for filing a lawsuit if it becomes necessary. An experienced litigation attorney can provide guidance and advise you on the best course of action based on the specific facts of your situation.
Want to Speak with an Attorney?
At Patterson Bray, our attorneys have extensive expertise in litigation and contract law. We possess a deep understanding of real estate transactions and sales, as well as the disclosure laws applicable to home sellers, real estate agents, and brokers in Tennessee. If you require legal assistance, call us today at (901) 372-5003.
Remember, being well-informed about Tennessee residential property disclosure law can protect your interests and ensure a smoother real estate transaction.
