What is Seller Disclosure Fraud?

In its simplest form, Seller disclosure fraud happens when a seller lies about the condition of their home in order to entice buyers to purchase the property. But to win a case for fraud requires evidence to show all of the legal elements of a claim. Elements are all of the pieces of a claim that have to be proven before you are entitled to compensation. The most common claim in cases like this is called fraud in the inducement. Fraud in the inducement happens when one person makes a fraudulent statement to get the other person to enter into a contract.

If you’ve ever bought or sold a home, you are likely familiar with a very important document called the “Seller’s Property Condition Disclosures.”

The Seller’s Property Condition Disclosure form (“Seller’s Disclosures”) is a document any homeowner who is selling their property is required to fill out detailing any and all known issues with the property. This includes things like whether there were ever remodels or additions made to the home; whether the home was ever used as a rental property; any known problems with the roof, sewer system, electrical system, etc.

As the Seller’s Disclosure form states, in capital letters:

SELLER IS OBLIGATED UNDER LAW, REGARDLESS OF OCCUPANCY, TO DISCLOSE TO BUYERS DEFECTS IN THE PROPERTY AND FACTS KNOWN TO SELLER THAT MATERIALLY AND ADVERSELY AFFECT THE USE AND VALUE OF THE PROPERTY THAT CANNOT BE DISCOVERED BY A REASONABLE INSPECTION BY AN ORDINARY PRUDENT BUYER.

‘Basically, if anything “material” ever happened, or was done, to the property–it can be good or bad–it should be identified on the Seller’s Disclosure form.

Learn more about how to navigate seller disclosure and fraud with our blog posts:

Elements of Fraud in the Inducement Claim in Utah

What to do if You Think You’ve been Defrauded.

Here are some steps you can take to protect yourself:

• If you are buying a home, a thorough inspection is more than worth the price; consider it a part of the price of the home (and a very small part of it, at that);

• If you are selling a home, take the Seller’s Disclosure form seriously. It is meant to protect you as well as the buyers.

• Finally, consider legal protections through our partner, Mountain West Legal Protective (www.mwlp.com). MWLP was created to help protect home buyers in just these sorts of situations from the spiraling costs of a legal action. It designed its Home Buyer Legal Protection Plan specifically for home buyers seeking to safeguard the biggest investment of their lives.

Remember, you’re not alone in this process. Hepworth Legal is here to help.