You are thinking of moving, and want to put your Missouri home on the market. Most states have legislation that would require home sellers to give an extensive written disclosure report to potential buyers. Such reports typically identify all material defects in the property, from a broken oven in the kitchen to a leak in the basement. Ironically, the ?Show Me State? doesn’t make you show very much.
Relatively few portions of Missouri law involve specific disclosures that home sellers must make to potential buyers. If, however, you use the services of a real estate agent, your agent may need to make certain disclosures to the buyer based upon professional regulations and state law. And there are some good reasons for you to give the buyer a full disclosure report anyway, notwithstanding the lack of explicit legislation requiring you to do so. What sorts of disclosures does Missouri require, and what disclosures might you want to make regardless?
Real Estate Regulations in Missouri
Missouri has only a few statutes that specifically require a home seller to make disclosures to potential buyers. The most explicit is Missouri Rev. Stat. ? 442.606. This statute requires that if the property is or was used as a site for methamphetamine production, the seller must disclose that in writing to the buyer.
Methamphetamine?also known as meth, crystal or ice?is a dangerous and illegal stimulant drug sometimes manufactured in homes. You need to disclose this criminal history only if you ?had knowledge of such prior methamphetamine production.? In other words, you need not examine old police records to see whether your house was ever the site of drug production ‘related to methamphetamine, its salts, optical isomers and salts.?
In a similar vein, the Missouri statute requires you to disclose in writing whether the property was the site ?[e]ndangering the welfare of a child? through ?physical injury.? This requirement is unique to Missouri. Again, you must only disclose incidents about which you are aware. For example, if you knew that the prior owner of the home was convicted of abusing a minor child there, this would qualify for disclosure under Missouri Rev. Stat. ? 442.606.
Missouri specifically allows you to remain silent on certain matters related to “psychological impacts” on the property, including whether prior occupants of the home had HIV/AIDS or whether the home was the site of a murder, felony, or suicide. (See Missouri Rev. Stat. ? 442.600.)
Beyond these specific requirements, Missouri courts will typically enforce caveat emptor clauses in purchase contracts. Under the doctrine of caveat emptor (?let the buyer beware?), judges ordinarily refuse to compensate buyers for home defects found after the purchase unless the seller did something to actively prevent the buyer from inspecting the property to find all of the defects or lied to the buyer directly about the condition of the property.
This equation changes if you use a licensed real estate agent to help sell your home, however. Agents are held to certain standards for honesty under Missouri Rev. Stat. ? 339.730.1, which requires that your agent ?disclose to any [potential buyer] all adverse material facts actually known or that should have been known by the [agent].?
In other words, licensed real estate agents cannot lie for you without risking their license. For example, if you tell your agent that you want to sell your home quickly because termites are about to eat the last structural beam, this would be the sort of ?adverse material fact? about which the agent would be legally obligated to inform the buyer.
Still, an agent ?owes no duty to conduct an independent inspection or discover any adverse material facts for the benefit of the [buyer] and owes no duty to independently verify the accuracy or completeness of any statement made by the [seller] or any independent inspector.? Thus, your agent does not need to verify his or her knowledge of your property, or perform any sort of inspection. The agent simply cannot lie for you.
Value of Disclosing More Than the Law Requires to Home Buyers in Missouri
Initially, you may feel fortunate to live in a state that doesn’t force you to reveal damaging defects about your property beyond particular criminal histories. However, you may be surprised to learn that there are short- and long-term benefits and protections associated with making disclosures?and that, as a result, many Missouri sellers choose to affirmatively make such disclosures.
The Missouri Association of Realtors promulgates a six-page disclosure form that you can use. (Also check with your own real estate attorney or agent to see whether he or she has a preferred form for you to use).
The form asks you to check ?Yes? or ?No? in response to a few dozen questions?divided into 19 categories?about your property. For example, you are asked how old the home is, whether it is the subject of any liens or lawsuits, and whether you are aware of any major problems with various aspects of the house (heating, cooling, electrical, plumbing, and so forth).
Although the form is fairly short, the answers should give potential buyers a fairly comprehensive snapshot of any known defects with your property?at least enough information to know what they should pay particular attention to when commissioning inspections of their own. The form also gives you additional space to explain any of your responses to those questions in greater detail, and encourages you to attach pages if necessary.
So, you might wonder, what is the purpose of filling out this disclosure form if Missouri doesn’t require it?
First, it sets clear expectations regarding the quality and condition of the home, and may smooth negotiations while you’re in escrow. The buyer will see from the start that you are being open and honest about the condition of the house, and will have less reason to react with shock and dismay if and when the inspection report turns up defects. (Imagine, by contrast, if you were to disclose nothing, after which the buyer hires a home inspector who finds unmitigated outbreaks of mold throughout the home. The buyer would be horrified, and would likely try to renegotiate the sale price or demand repairs.)
Second, the disclosure prevents the buyer from later claiming that he or she did not know about a particular defect. Imagine that there is a busted HVAC system, and you do not say anything to the potential buyer. Even if the sale does close successfully, the buyer will quickly discover the problem upon trying to turn on the heat. Any claim that you ?didn’t know? about it would be, at best, difficult to believe. The buyer will be angry; not just because you were dishonest by omission, but also because the buyer will now have to face significant repair costs. This creates a risk that the buyer may sue you for breach of contract or fraud.
Of course, you may have strong arguments to beat such a buyer’s lawsuits, especially if your purchase contract included a caveat emptor clause. Still, nothing prevents the buyer from suing you. The buyer may lose the legal arguments, but you will be forced to hire an attorney and engage in the stress of litigation. Making a full and forthright disclosure would ensure that the buyer’s expectations match reality. All of this will help to make sure that your home sale in Missouri goes smoothly.