Understanding the Maryland Disclosure/Disclaimer Form

In a previous blog, we wrote about latent defects, and how they apply to buying and selling residential property. When sellers are aware of latent defects (such as termite damage or a sewer line clogged with tree roots), they must disclose those defects on a Maryland Residential Property Disclosure and Disclaimer Form. If a new homeowner discovers a serious defect that wasn’t disclosed before sale, that means either the seller didn’t know of the defect or the seller deliberately misled the buyer about the condition of the property. To determine what actually occurred, the homeowner will likely need the help of an attorney.

Disclosure vs. Disclaimer

Using the same form, a seller may choose the route of disclosure or disclaimer. A disclaimer means that the seller offers the property “without representations and warranties as to its condition,” so it absolves the seller of responsibility, should a defect be later discovered. However, even when choosing to offer a disclaimer, a seller must reveal latent defects of which they are aware. A disclaimer is more appropriate for real estate “flippers,” or people who have not lived in the home they are selling. If someone has lived in a property for several years, buyers should generally expect a seller to complete the disclosure section, which includes questions about:
  • The evidence of moisture in the basement
  • Whether heat and air-conditioning are supplied to all finished rooms
  • Whether any problems exist with electrical fuses, circuit breakers, outlets, or wiring
  • Whether the roof leaks.
Sellers would generally be aware of any major defects after living in a home for many years. So if they choose to sell with a disclaimer only (instead of a disclosure), buyers might want to think twice about whether the property is a good investment.

Digging Deeper

Buyers should always hire their own inspector to assess a property; however, inspectors can and do overlook major defects. According to Investopedia, the main defects that inspectors miss include:
  • Heating, ventilation and cooling systems – Depending on the time of year, inspectors may be unable to evaluate how well these systems work (if the house is vacant and cold, for example, inspectors can’t tell whether the air conditioning is actually working as it should be).
  • Leaky roof – Inspectors may look in the attic, but they don’t access the roof; only a licensed roof contractor can thoroughly check for roof defects.
  • Malfunctioning appliances – Most inspectors will test all appliances, but they can’t necessarily predict whether an appliance will malfunction in the near future.
  • Hidden problems – Wall-to-wall carpet could be hiding rotting floorboards, but an inspector isn’t going to take up the carpet to check. With the seller’s permission, and at the buyer’s request, an inspector may temporarily move fixed items (like carpeting or floor tile) to check the surface beneath.
With flipped properties, a home may have changed ownership many times in a short period of time. Buyers who want a clearer understanding of the home’s history can hire an attorney to look into any official documents relating to the property (such as foreclosure cases and construction permits).

Advice for Buyers and Sellers

Lusk Law, LLC., has helped buyers and sellers understand their rights and responsibilities in real estate transactions, including expert guidance as a  Maryland real estate attorney. Our experienced attorneys have provided legal counsel and representation to homebuyers and sellers in Frederick County, Howard County, Montgomery County, Baltimore County, Baltimore City, Carroll County, Washington County, Anne Arundel County, and other counties in Maryland. Please call us at 443-535-9715 or fill out our contact form if you have any questions about this topic.