09/23/21

Real Estate Insights

Failure To Disclose: How to Take Action in the State of Wisconsin

What is Failure to Disclose?

 Failure to disclose is a legal term. It means the previous owners of your home did not report a defect that impacts the value of the house.

Home defects are typically uncovered during the inspection phase. But not all issues are obvious, even to a trained eye. Something may slip through the cracks.

For a Failure to Disclose case to be valid, you must be able to prove that the owners knew about the defect. And they chose not to repair or acknowledge the defect before the sale.

Don’t worry- failure to disclose cases are rare. But buyers and sellers alike need to be educated on Wisconsin law for this issue.

Issues A Wisconsin Realtor Must Disclose 

Any good real estate agent values the best interest of their clients over “making a sale”. Open and honest communication is key to a positive experience. But you won’t have to go off of trust alone. Wisconsin real estate law is set up so that real estate agents must disclose any knowledge of material adverse facts.

That’s a good real estate vocab word to keep in your back pocket.

Here’s what it means:

Any facts about the property that someone would feel are significant enough to impact their desire to enter a contract.

“Adverse facts” is a bit of a broad term. But here are the main categories that fall under the term:

• Anything that significantly (and adversely!) impacts the value of the property.

• Anything that significantly reduces the structural integrity of the property. Or the possibility of making any improvements.
• Anything that poses a significant health risk.

This rule falls under the National Association of Realtors Code of Ethics. Here’s a bit more about the Realtor Code of Ethics:

• Realtors shall avoid exaggeration, misrepresentation, or concealment of pertinent facts
• Realtors are not obligated to advise on matters outside the scope of their real estate license.

What A Wisconsin Home Seller Must Disclose

Wisconsin law requires sellers to disclose any condition that:

• Negatively affects property value
• Would shorten the lifespan of the property 
• Impacts the health and safety of future occupants

By law, sellers are required to answer questions on a real estate conditions report. These questions mostly ask about structural defects like:

• Roof
• Chimney
• Foundation
• HVAC
• Wiring
• Plumbing
• Well Water 
• Asbestos 
• Lead Paint 
• Radon 
• On-site fuel tanks 
• Property Boundary lines 

Answer each question honestly and comprehensively. If you’re confused about any language or questions on the report, you can always ask your real estate agent for guidance.

When in doubt, it’s best to disclose all home defects. Doing this is the best way to avoid any future legal trouble. The last thing you want is for an angry buyer to accuse you of covering up an issue.

I Feel Confident that I Have A Case. How Can I Prove that the Seller Lied on their Conditions Report?

Quick disclaimer: we are not lawyers and cannot provide legal advice. 

This can often be difficult. You must be able to prove, beyond a reasonable doubt, that the seller lied on their conditions report. Often, subtle differences between a condition report and real damage aren’t enough. 

You’ll need hard, concrete proof. Things that may help you in your case are:

• Previously attempted repairs
• Property insurance claims
• Attempts to conceal the defects (like painting over the black mold, for example)
• Unfulfilled quotes from repair companies

Who Can Help You Take Action?

Unfortunately, your real estate agent cannot help you with your case, except to recommend a good lawyer. You’ll want to work specifically with a real estate lawyer. Our recommendation for Madison area real estate law is Max A. Meier of Loniello, Meier & Associates, LLC. 

Here are a few other top performers in the city:

• Jason A Greller
• DeWitt LLP 
• Kay and Anderson LLC 
• Karen D Julian Law Office 
• Strohschein & Green 

How Can I Prevent A Failure To Disclose Situation? 

Real estate agents are not legal professionals. But working with a licensed real estate agent can help you prevent a bad situation.

You’ll want to work with a team that values honesty, integrity, and transparency over everything. Your real estate agent is on your side… always. They’ll tour homes alongside you with a critical eye, and will point out any red flags. With a purchase this big, it’s always good to have a second pair of eyes.