Residential Disclosure Requirements Under Florida Law

Disclosures and inspections are an integral part of any residential real estate transaction. Accordingly, questions often arise during this process concerning a seller’s obligations relating to the disclosure of information about their property. At times, problems with a property are discovered by the buyer following closing, resulting in allegations of hidden defects and potential liability for a seller. Accordingly, REALTORS® should be knowledgeable of the disclosure requirements under Florida law and fully inform sellers (and buyers) of what is required – and what is not.

FLORIDA LAW

Florida law requires the seller of residential real property to affirmatively disclose to the buyer all known facts materially affecting the value of the property, which are not readily observable and are not known to the buyer. Johnson v. Davis, 480 So. 2d 625 (Fla. 1985). The Johnson v. Davis standard may be broken down into three parts to determine whether disclosure is required: (1) a fact exists prior to closing that materially affects the value of the property; (2) the seller is aware of this fact; and (3) the buyer is unaware of this fact and the fact is not readily observable. If the answer to these three questions is yes, then the fact must be disclosed. This means that minor issues that may be known to the seller, but that do not materially affect the value of the property, need not be disclosed. In addition, a fact that may materially affect the value of the property, but that is known or discovered by the buyer (perhaps via an inspection) prior to closing, would also need not be disclosed. However, to avoid potential liability, the best practice would be to make disclosure if there is any doubt as to whether the fact is material, and do not presume that the buyer knows of the fact.

FLORIDA LEGISLATIVE STATUTES

The Florida Legislature has enacted several statutes that expand or modify the requirements established by Johnson v. Davis. These include required disclosure of mandatory membership in a homeowner’s association (§720.401, Fla. Stat.) or condominium association (§718.503, Fla. Stat.); the possible existence and dangers of radon gas (§404.056, Fla. Stat.); and possible coastal erosion and applicability of federal, state, or local regulations relating to coastal properties (§161.57, Fla. Stat.). In addition, for homes built prior to 1978, Federal law requires disclosure of the existence of lead-based paint and the buyer’s right to inspect for lead-based paint.

One statutory exception to disclosure is found in the Florida Statutes section 689.25, which provides that “the fact that a property was, or was at any time suspected to have been, the site of a homicide, suicide, or death is not a material fact that must be disclosed in a real estate transaction.” Although some people may believe this to be a fact that would materially affect the value of a property, the legislature has excluded this as a fact requiring disclosure, and therefore, Johnson v. Davis does not apply.

SELLER’S PROPERTY DISCLOSURE FORM

Florida REALTORS® provides a Seller’s Property Disclosure form to provide to sellers. While the form itself is not required by law, it is a very useful tool to assist sellers in thinking about the type of information that would need to be disclosed and to make the necessary disclosures. Accordingly, Realtors® should strongly encourage sellers to utilize the form when listing a property for sale. Moreover, REALTORS® should inform sellers that the items on the disclosure form are not exhaustive. In other words, if a seller has information that may materially affect the value of the property being sold, it must be disclosed even if the disclosure form does not include that specific item. When it comes to disclosure, more is better.