Seller's Disclosures in Michigan Real Estate Transactions

In Michigan, when selling or transferring a home, it's essential to understand the legal requirements and responsibilities associated with the required forms. The Michigan Seller's Disclosure Act mandates that sellers provide certain information to buyers to ensure transparency in real estate transactions. In this blog, we'll delve into what seller's disclosures are, what is required to be disclosed, when seller's disclosures are not required, as well as discuss potential liability.

What Are Seller's Disclosures?

Seller's disclosures are documents that sellers are legally obligated to provide to potential buyers. These documents aim to inform buyers of the property's condition, known defects, and other relevant information. The purpose is to prevent fraud, misrepresentation, or disputes during the real estate transaction.

What Must Be Disclosed?

In Michigan, sellers must disclose any material defects or issues with the property. This includes, but is not limited to:

1. Structural defects

2. Plumbing and electrical problems

3. Water damage or flooding issues

4. Pest infestations

5. Environmental hazards

6. Legal disputes related to the property

7. Any other conditions that could negatively affect the property's value

The goal is to provide buyers with an accurate picture of the property's condition, allowing them to make informed decisions.

When Are Seller's Disclosures Not Required?

Not all properties or sellers are required to provide disclosures under Michigan law. Some exceptions include:

1. Transfers between co-owners, such as spouses or family members.

2. Sales ordered by a court, such as foreclosures or estate sales.

3. New construction that has never been inhabited.

4. Sales of agricultural real estate.

It's essential to consult with your real estate attorney to determine if you qualify for any of these exemptions. For more information, review MCL 565.953 or reach out to our office. 

Liability for Misrepresentation

The Michigan Seller's Disclosure Act also includes provisions regarding the liability of sellers for misrepresentation under MCL 565.955. If a seller intentionally conceals or fails to disclose a known material defect, they may be held liable for damages incurred by the buyer due to the non-disclosure. Sellers are encouraged to be thorough and honest in their disclosures to avoid potential legal consequences.

The Michigan Court of Appeals recently reviewed the issue of Seller’s Disclosures in Pilcher v. Benoit.  At the center of the Court’s opinion was whether the seller committed fraud or perpetrated “silent fraud” by failing to disclose information about the home’s faulty septic tank covering in the seller’s disclosure statement. In Pilcher, the buyer did not discover the issue until after closing when they fell over the tank cover while working in the backyard. A former tenant of the seller who lived in the home provided testimony which suggested that the seller knew of the septic tank and it’s dangerous cover.  The Court of Appeals determined that there was a question of fact about whether the seller knew of the faulty septic tank covering at the time the seller’s disclosure statement was filled out.

Michigan’s Seller's Disclosure Form

For your convenience, here's a link to the official Michigan Seller's Disclosure Statement form, provided by eForms: Michigan Seller's Disclosure Statement Form

Instructions and Tips:

1. Carefully fill out the form: Take your time to provide accurate and detailed information about the property's condition.

2. Be honest: Disclose all known issues or defects, as honesty is key to a successful real estate transaction.

3. Consult with your real estate agent: Your agent can help you understand what needs to be disclosed and guide you through the process.

4. Keep records: Maintain copies of all documents and communications related to the disclosure.

5. Seek legal advice: If you're unsure about what should be disclosed, consult with a real estate attorney experienced in your type of transaction to ensure all necessary disclosures have been met.

6. When in doubt, leave it blank: If after all of the above you are still unsure how to address a certain disclosure, it is better to leave it blank than to put an inaccurate answer.

In conclusion, understanding and complying with Michigan's seller's disclosure requirements is vital for a smooth real estate transaction. Being transparent and honest about your property's condition will not only help you comply with the law but also build trust with potential buyers, making your sale a more successful and hassle-free process.

This blog is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with a real estate attorney about your case Contact Us at (734) 743-1646 to schedule a consultation.