In most Ohio residential real estate transactions, the sellers are required to provide the buyers with a disclosure form. §5302.30 of the Ohio Code (2005) governs property disclosure forms and states that this statute would apply to “any transfer of residential real property that occurs on or after July 1, 1993.” The statute also applies to installment contracts, leases with options to purchase, and renewable leases with ninety-nine-year terms.
Overview of Ohio Seller Disclosure Law
§5302.30 does not apply to commercial real estate, which has its own separate laws, and would not apply in the instance of a foreclosure, inherited property, or in “A transfer between spouses or former spouses as a result of a decree of divorce…”
It would also not apply to new homes that have yet to be lived in. Accordingly, this statute is generally limited to traditional residential real estate transactions between a buyer and a seller.
§5302.30 of the Ohio Code (2005) defines the required seller’s disclosure form as:
…A form [disclosing] material matters relating to the physical condition of the property to be transferred, including, but not limited to, the source of water supply to the property; the nature of the sewer system serving the property; the condition of the structure of the property, including the roof, foundation, walls, and floors; the presence of hazardous materials or substances, including lead-based paint, asbestos, urea-formaldehyde foam insulation, and radon gas; and any material defects in the property that are within the actual knowledge of the transferor.
§5302.30 further provides that:
The [disclosure] form also shall set forth a statement of the purpose of the form, including statements substantially similar to the following: that the form constitutes a statement of the conditions of the property and of information concerning the property actually known by the transferor; that, unless the transferee is otherwise advised in writing, the transferor, other than having lived at or owning the property, possesses no greater knowledge than that which could be obtained by a careful inspection of the property by a potential transferee; that the statement is not a warranty of any kind by the transferor or by any agent or subagent representing the transferor in this transaction; that the statement is not a substitute for any inspections; that the transferee is encouraged to obtain the transferee's own professional inspection; that the representations are made by the transferor and are not the representations of the transferor's agent or subagent; and that the form and the representations contained therein are provided by the transferor exclusively to potential transferees in a transfer made by the transferor, and are not made to transferees in any subsequent transfers.
In other words, a seller must disclose what is reasonably known to them at the time of sale, or else they may be held responsible in a subsequent lawsuit alleging latent defects by the buyer.
Although there is no specific “look-back” time-period stated in §5302.30, the mandatory disclosure form approved by the Ohio Department of Commerce often cites a five-year limit regarding disclosures. But note that you should discuss all disclosures with your attorney before completing your disclosure form/real estate contract.
Regarding a statute of limitations on a potential lawsuit, please discuss this with your lawyer as well, and as soon as possible. Some Ohio appellate cases have found that the statute of limitations runs from the time you discovered or should have discovered the defect upon taking possession of a home. But statutes of limitations are always changing and it’s important to make sure you’re not inadvertently waiving your interests.
With an understanding of what a seller disclosure form requires, and some knowledge of timing, let’s turn our attention to potential legal liability should proper disclosure not occur.
When is an Ohio Seller Responsible for Failing to Disclose a Material Defect in a Home?
§5302.30 applies to “latent defects,” meaning issues not easily ascertained by the buyer during walkthrough or inspection.
Common Defects Not Disclosed
Because of the requirement that defects are latent, issues easily seen would generally not trigger relief under this statute.
Some common examples of latent defects include:
- Decommissioned septic tanks.
- Buried oil tanks.
- Bug infestations.
- Basement flooding.
Said another way, the type of things that may only be known to someone who has resided at a location for a period of time. Unlike some states, in Ohio, it must be proven that the seller had knowledge of a defect for a buyer to be successful in a real estate disclosure lawsuit. Specifically, §5302.30(F)(1) provides that:
A transferor of residential real property is not liable in damages in a civil action for injury, death, or loss to person or property that allegedly arises from any error in, inaccuracy of, or omission of any item of information required to be disclosed in the property disclosure form if the error, inaccuracy, or omission was not within the transferor's actual knowledge.
If you’ve recently purchased a residential property with defects, then you may be able to collect damages from the seller via a real estate lawsuit. If you’re a seller, you should keep in mind this potential liability. Retaining an Ohio real estate attorney at the time of the transaction is your best safeguard against expensive and unwanted future lawsuits. In many instances, the real estate contract itself will expand upon real estate disclosure, including possible indemnification language protecting you from future lawsuits.
This is all quite important because even if you are selling a property “as is” that will not waive all liability under §5302.30 or other applicable laws such as fraud.
Indeed, §5302.30(J) advises that real estate litigation may not be limited to only this statute, stating:
(J) The specification of items of information that must be disclosed in the property disclosure form as prescribed under division (D)(1) of this section does not limit or abridge, and shall not be construed as limiting or abridging, any obligation to disclose an item of information that is created by any other provision of the Revised Code or the common law of this state or that may exist in order to preclude fraud, either by misrepresentation, concealment, or nondisclosure in a transaction involving the transfer of residential real property. The disclosure requirements of this section do not bar, and shall not be construed as barring, the application of any legal or equitable defense that a transferor of residential real property may assert in a civil action commenced against the transferor by a prospective or actual transferee of that property.
Common law allegations of civil fraud, material misrepresentation, negligence, breach of contract, and the like may also be filed as part of any non-disclosure real estate suit. This is an important consideration because the factors to prove negligence or other elements of civil harm may differ from what is specifically stated in §5302.30.
Non-disclosure may allow a buyer to rescind a real estate contract, or if the transaction has already occurred, to seek damages including:
- Damages/cost to repair.
- Loss of property value.
- Rescinding the contract/sale.
- Reimbursement of legal fees or even:
- Punitive damages.
The actual damages awarded will greatly depend upon the nature of the alleged non-disclosure/fraud. Whether you are found responsible for fraud, breach of contract, negligence, or other civil torts will determine the remedies available to the buyer. It is important to act in good faith when completing your required seller’s disclosure form. Particularly because most homeowner’s insurance plans will not cover such suits. In other words, you will likely be defending such suits out of your own pocket.
Ohio Real Estate Non-Disclosure Attorneys
The law firm of Bridges, Jillisky, Streng, Weller, & Gullifer, LLC emphasizes Ohio real estate litigation. If you are a seller or a buyer to a real estate non-disclosure lawsuit, then you should call us today at (937) 403-9033 to schedule an initial consultation, or feel free to utilize our firm contact form.
We look forward to working with you to efficiently address your real estate non-disclosure litigation needs.