Standards For Residential Real Estate Seller Disclosure Documents

By harley erbe

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If you've ever bought or sold a house in Iowa, you're probably familiar with the real estate disclosure that Iowa law requires sellers to complete.  It's a form that has numerous lines asking questions about the condition of the property and structure.  It's meant to inform and protect potential buyers of real estate.  Of particular interest to prospective buyers of the property are often things such as water intrusion and the condition of the roof and foundation. 

Iowa Code Chapter 558A is Iowa's Real Estate Disclosure Act.  It requires persons interested in transferring real estate to deliver a written disclosure statement to prospective buyers.  The disclosure statement must include certain information about the condition and important characteristics and structures on the property.  Iowa's real estate commission is charged with adopting more specific rules concerning the mandatory contents of seller disclosure statements. 

Sellers need to take disclosure statements seriously.  Many people are mistaken that as long as they don't truly "know" about an issue with the property, they're excused from having to disclose it.  Iowa  Code 558A requires more of sellers than that.  Sellers can also violate 558A if they fail to exercise ordinary (reasonable) care in obtaining the information they provide on the seller disclosure statement.  That essentially allows for negligence claims under 558A.  Buyers don't have to prove fraud or actual knowledge of a property issue in order to prove a violation of 558A. 

This means that sellers have an affirmative duty to investigate the facts of the property before submitting the seller disclosure statement.  That is confirmed by 558A, which states that "[a]ll information required by this section and rules adopted by the commission shall be disclosed in good faith.  If at the time the disclosure is required to be made, information required to be disclosed is not known or available to the transferor, and a reasonable effort has been made to ascertain the information, an approximation of the information may be used.  The information shall be identified as an approximation.  The approximation shall be based on the best information available at the time."  In short, 558A does not permit willful ignorance about an issue with the property.

This is important because 558A specifically provides for a civil cause of action against anyone who violates it.  The seller can be liable to the buyer for the buyer's actual damages incurred because of the defect.  A real estate disclosure claim could also be brought under Iowa Code Chapter 714H, Iowa's private consumer fraud statute.  A successful 714H claim might allow the buyer to recover triple damages, plus actual damages, and attorney fees and expenses. 

Standard common law fraud claims are also a possibility in real estate disclosure matters, although such claims don't include attorney fees or expenses.  But regular fraud claims are very difficult to prove.  Further, the only way to get extra money above actual in a regular fraud claim is to recover punitive damages, which is even harder to do than proving regular fraud.  For these reasons most people normally opt for the statutory claims available under 558A and 714H. 

Please feel free to contact us if you need the assistance of a Des Moines real estate litigation attorney.

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