Owners of residential real estate can sell their property when the market is favorable and may earn quite a bit of money from a transaction. Real estate in Hawaii commands a premium price in many cases, and the market has been particularly seller-friendly in recent years.
Sellers eager to get their homes on the market and to optimize the asking price for the home might rush through the disclosure process as they prepare to list the property. For example, they might decline to inspect the property and may instead indicate that they don’t know the condition of key systems within the home on written disclosure forms. They may then indicate that they want to list the property in as-is condition. Do such listings eliminate seller liability for property defects?
As-is listings may lead to increased scrutiny
Hawaii state statutes impose extensive disclosure obligations on those selling real estate. The concept of buyer beware does not apply during real estate transactions. Instead, the onus is on the seller to make complete and accurate disclosures about the condition of the property.
If they misrepresent the condition of the property, fail to conduct reasonable inspections or intentionally avoid disclosing known issues, they may be liable for that conduct later. Sellers therefore need to be very thorough about their disclosures.
Telling buyers in writing about any known issues with the property and performing a thorough review of property conditions is of the utmost importance. Sellers who list their properties in as-in condition may trigger the skepticism of lenders, who may insist on thorough inspections to verify the property’s condition. Surprise defects can lead to a canceled closing.
Even if the closing happens, the failure to disclose defects can come back to haunt sellers later. Buyers who have already taken possession of the property could sue them to request compensation for the cost of repairing issues that could affect the value of the property or their ability to quietly enjoy their home. In some cases, the professional insurance coverage of a real estate agent can cover losses related to disclosure issues. Other times, sellers may be personally liable for undisclosed defects at a property.
Having accurate information about Hawaii’s real estate rules, including when disclosures are necessary, can help sellers limit their liability while simultaneously optimizing what they receive when listing residential real estate. Sellers may benefit from the assistance of a lawyer as they prepare to list a property for sale in many cases.