Structurally Sound: What to Know Before You Close

Buying a home is an incredibly exciting event and, in many cases, will be one of your biggest financial investments. It can also be incredibly stressful, especially if the home you end up with is not of the quality you believed you were purchasing. All too often, homebuyers close on a home purchase only to later find significant defects and problems that result in necessary, and potentially expensive, repairs. A legal principle known as “caveat emptor” (or “let the buyer beware”) used to apply to all home purchases in Indiana – if the buyer had an opportunity to inspect before closing, then a seller would likely not be held liable for failing to disclose defects. Indiana law now requires the seller of a residential property to disclose known defects on the Seller’s Residential Real Estate Sales Disclosure form (“SDF”), including roof defects, foundation defects, and HVAC defects. (To see the SDF, go here: http://www.in.gov/pla/files/Sellers_Disclosure_Form.pdf) This written disclosure requirement attempts to protect homebuyers from unscrupulous sellers, but its protections are not comprehensive. First, the required disclosures are limited to those items specifically included in the SDF. Second, it can be difficult to hold a seller legally liable for damages resulting from misrepresentations on the SDF because the buyer must present evidence indicating the seller had actual knowledge of the defect and failed to disclose it.

Because of these limitations, it is important for homebuyers to take their own precautions to attempt to ensure that their future dream home is free from major defects before closing. Here are a few helpful tips:

• Obtain a completed SDF before making an offer. Don’t wait until after the Seller has accepted your offer.
• Ask your realtor to include a provision in the purchase agreement allowing you to terminate your obligation to purchase if you discover significant defects during inspections, or a provision that requires the seller to repair any uncovered defects before closing.
• Get your questions answered by the seller in writing. Any written disclosure by a seller must be accurate, even if not contained on the SDF, and even if the disclosure is not otherwise required.
• INSPECT THE PROPERTY! Ask your realtor for a referral for an experienced inspector.
• Re-inspect if necessary.  If the seller is performing repairs, re-inspect completed repairs prior to closing.

Buying a home is a major undertaking, make sure you protect yourself.