This is an important topic because today’s litigant typically sues the real estate agent and the seller when a lawsuit is filed over a seller disclosure issue.
I continue to see “No representation” selected as an answer on the seller disclosure. Blair Cato takes the position that “No representation” should rarely, if ever, be used.
I recently had the pleasure of serving on the committee that rewrote the seller disclosure currently in use. The committee wanted to eliminate “No representation” as a choice. However, South Carolina Code §27-50-40(B) says that the form “must give the owner the option to indicate that the owner has actual knowledge of the specified characteristics or conditions, or that the owner is making no representations as to any characteristics or conditions.”
On the face of the statute it would appear that “No representation” could be an appropriate response. However, there are several salient reasons why your client should never take this position. First, unless your seller falls into one of the fifteen exemptions for completing the seller disclosure (SC Code §27-50-30), the act of checking “No representation” essentially attempts to circumvent the disclosure requirement as set forth in the statute. It is likely a court would hold that this tactic is tantamount to failing to disclose what was required under the statute.
Secondly, the seller has a duty to disclose certain material defects in the property; in particular those defects set forth in the statute. When your client selects “No representation” on an item of which he has knowledge, he is failing to disclose a known defect which likely will result in a claim for failure to disclose.
Next, the questions set forth in the seller disclosure ask if the seller has “any knowledge of” a defect or condition. This is a simple “yes” or “no” question. Too many sellers claim that since they do not live in the house or it is a rental they do not know and want to select “No representation.” This is not an appropriate reason not to answer the question. As posed, the seller who does not live in the house can answer “yes” or “no” as to whether or not they have knowledge of the defect. You either know or don’t know.
Lastly, I have seen an increase in the number of lawsuits against sellers for failure to disclose properly. If the seller truthfully discloses there is less likelihood of a claim. It is nonsense to think that selecting “No representation” would shield you from a claim of failure to disclose. Lawsuits are expensive and should be avoided if possible.
If you represent a seller who has selected “No representation” you need to tell the seller that they may have legal liability by not answering the question and that they should consult a real estate attorney prior to making this selection. If you represent a buyer who has been presented a seller disclosure with “No representation” selected, have your buyer return it to the seller for a correct answer. Remind the seller that either they know or do not know if the item is defected or broken and that “No representation” is not an acceptable answer.