A common question on the Legal Hotline concerns the responsibility a seller/listing agent to provide information regarding an inspection report ordered by some other third-party (e.g. a previously interested buyer).
Must the seller who possess a previously obtained report provide a copy of it to any future buyer? In short, no.
Can the seller provide it? Sure, unless the seller has a limitation on sharing it, such as a “deal” with a previous buyer that allowed the seller to see the report if they agreed not share it.
Can the seller simply ignore an inspection report they received earlier and not share anything about it with future buyers? It really depends.
A 1985 Florida Supreme Court decision, Johnson v. Davis, established that a seller must disclose all facts materially affecting the value of the property that are not readily observable and not known to the buyer. This disclosure applies to residential property that will be sold “as is” or using a contract that obligates the seller to make certain repairs. As a result, an inspection report could conceivably uncover a material defect that the seller didn’t know about.
In considering whether or not an issue is material, compare the relationship of the undisclosed issue to the value of the property. Are there a few tiles missing on the roof or is there a major structural roof problem?
Also remember that a single inspection ordered by a third party is not necessarily the final word. It’s sometimes possible to disprove reports by calling in other experts.
Not just the seller – it’s you too
The most important takeaway here is that these disclosure requirements apply to Realtors too. Failure to disclose a material fact that’s unknown to the buyer could be a license law violation. It could also lead to a potential lawsuit if the nondisclosure is ever subject to litigation.
Your best tactic is to simply play it straight. If confronted with a seller who refuses to disclose something you feel should be disclosed, it becomes risky for you to continue with that transaction.
As the court stated in the Johnson decision, “the law appears to be working toward the ultimate conclusion that full disclosure of all material facts must be made whenever elementary fair conduct demands it.”