To Disclose or Not to Disclose

 

Nevada’s Residential Seller’s Real Property Disclosure Form

 

Under Chapter 113 of the Nevada Revised Statutes (“NRS”), most sellers of residential property in Nevada are required to disclose defects to buyers at least 10 days prior to conveyance. To facilitate this, the Nevada Real Estate Division publishes a check-the-box Seller’s Real Property Disclosure Form (the “SRPD Form”). The SRPD Form lists several common residential amenities and conditions and prompts the seller to check a “YES” box, “NO” box, or “N/A” (not applicable) box to indicate whether the seller is aware of any applicable defects.

 

Not surprisingly, sellers often struggle over how much to disclose. The safest approach might be to disclose everything, even the smallest of problems. That way, the buyer is far less likely to later complain that “I didn’t know” or “you didn’t tell me” or to file a lawsuit based on some kind of misrepresentation or fraudulent concealment theory. However, every home has periodic maintenance and repair issues, so adopting that approach might lead to a mile-long list of “defects.” Moreover, the stigma associated with the term “defect” often has such a chilling effect that it can significantly drive down sales prices or even prevent sales from occurring altogether.

 

Originally, there was little guidance as to how much disclosure NRS 113 required. However, a 2007 Nevada Supreme Court decision affirmed that a residential seller has a duty to disclose only defects of which the seller is aware. The Court said that “aware” means “marked by realization, perception, or knowledge” and opined that it is impossible in any case for a seller to disclose conditions of which he is unaware. In addition, the Court held that prior water damage which had been properly repaired no longer constituted a defect. Accordingly, the seller had no duty to disclose either the repaired water damage of which she was aware or the mold of which she wasn’t aware.

 

The Supreme Court’s decision should give sellers comfort that they don’t have to disclose everything. Unfortunately, though, NRS 113 isn’t the only statute that governs seller disclosures, and penalties for failing to disclose when required can be severe. When in doubt, consult a qualified attorney.

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