By DAVID HOUCK
Atomic Realty LLC
We are occasionally asked, “must I complete the property disclosure statement of adverse material facts (NMAR form 1110) you have supplied?” The answer is no you don’t have to use our form however, while you don’t have to fill out OUR property disclosure statement form, in New Mexico you do have a duty to disclose all the adverse material facts that you actually know about, either on our form or one of your own. Please be aware, you have to disclose adverse material facts but do not have to repair them.
If working with us we strongly urge you to protect yourself and honestly, and to the best of your knowledge complete the property disclosure statement, it may help limit your future legal liability. Furthermore, if you are a “For Sale By Owner” the State of New Mexico mandates you too have the same duty to disclose adverse material facts.
What do you have to disclose? Sellers do have a duty (Legal obligation) to disclose adverse material facts that would affect the desirability or value of a property to a reasonable person. The Seller needs to disclose facts they actually know about but is not under an obligation to conduct inspections to determine if any unknown adverse material facts exist. Sellers are not responsible to disclose minor defects (those that do not affect the value or desirability) or defects they do not know about. Once a home is sold to a buyer any subsequent disclosed defects or prior unknown undisclosed defects are the buyer’s responsibility, NOT the seller’s.
When does a Seller have to disclose an adverse material fact? (One that would affect the desirability or value of a property to a reasonable person.) A Seller should disclose an adverse material fact when they become aware of it, any time between listing and closing.
What would the court find affects the desirability or value of a property to a reasonable person? A leaky faucet, an uncut lawn? Probably not, however, undisclosed broken windows, tiles, heat and air conditioning are much more likely but that is for the system to decide. We, like most people, believe in honest transactions and suggest that if you actually know of something that is wrong disclose it.
If you, as a seller, had an adverse material fact or defect and remediated it, by repair or replacement it is to your advantage to disclose what was wrong, how it was remediated, and who performed the remediation.
While every transaction is unique and if a buyer still has concerns they should ask their broker about purchasing a home warranty to help with the cost of other possible repairs after purchase.
David Houck is the Qualifying Broker for Atomic Realty, with 40 years experience, a BS in math and physics and a doctorate in law. For more details on these issues and free selling and buying tips see AtomicRealty.net.