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Buyer, Read Your Disclosures | Anna Gerlants

“Buyer, Read Your Disclosures | Anna Gerlants”

“The Seller Disclosure Statement is one of the most important disclosure documents a buyer receives,“ says Anna Gerlants. Not only does it provide seller information about his property, but it also outlives the purchase agreement. Anna Gerlants states that if a problem shows up after closing, a buyer can check the disclosure statement to see if the seller disclosed the problem.

In completing the form, says Anna Gerlants, a seller answers “yes”, “no”, or “unknown” to identify if an item works or not. Additional pages can be added, perhaps to explain a problem’s resolution, reminds Anna Gerlants.

“Read all the questions. You never know what you might miss if you don’t,” warns Anna Gerlants. For example, a seller often discloses if a stove works, if there is a central vacuum system or if there is city water. This is the usual manner in which that is done:

Appliances/Systems Services.
The items below are in working order.
(The items listed below are included in the sale of the property only if the purchase agreement so provides.)

Anna Gerlants explains that disclosure doesn’t mean a stove or refrigerator is included in the sale. That only happens if the buyer contractually asks for personal property. If a seller wants to take a fixture he hasn’t already removed, he must ask.

Surrounding area conditions, like the proximity of a dump, a shooting range or a turkey farm, might be undesirable and may not be included in the disclosure, requiring a buyer to do due diligence like driving to the area to discover what is around the property. Such a discovery can make or break a sale, notes Anna Gerlants.

Further information is provided to the buyer, and Anna Gerlants says that a seller must update the form if anything changes. For this reason, a seller must complete the form himself, Anna Gerlants adds. By signing and dating, a seller certifies that the statement is true and correct to the best of his knowledge. A broker or salesperson is not liable for any representations made by a seller, only those they directly made.

If the answer to any of these questions is yes, please explain. Attach additional sheets, if necessary:

The seller has lived in the residence on the property from _______ (date) to ______ (date). The seller has owned the property since ________ (date).

If any changes occur in the structural, mechanical, or appliance systems of this property from the date of this form to the date of closing, seller will immediately disclose the changes to buyer.

Anna Gerlants notes that a final section specifically addresses a buyer. It involves 3 instances in which the seller need not disclose because the information is either available from a government site (public records) or from any inspectors the buyer hires. The 3 statements protect the buyer, says Anna Gerlants, by telling him where to find information.

The first statement reads as follows:

BUYER SHOULD OBTAIN PROFESSIONAL ADVICE AND INSPECTIONS OF THE PROPERTY TO MORE FULLY DETERMINE THE CONDITION OF THE PROPERTY. THESE INSPECTIONS SHOULD TAKE INDOOR AIR AND WATER QUALITY INTO ACCOUNT, AS WELL AS ANY EVIDENCE OF UNUSUALLY HIGH LEVELS OF POTENTIAL ALLERGENS INCLUDING, BUT NOT LIMITED TO, HOUSEHOLD MOLD, MILDEW AND BACTERIA.

This is the second recommendation that a buyer have inspections done. Typical purchase offers mention an inspection. This clause recommends several different ones.

Often, a buyer’s broker uses a pre-printed contract that may not fully protect a buyer. The mission, today, is to ensure parties have legal representation. Unfortunately, buyers often won’t hire an attorney because of the cost. Anna Gerlants adds that it’s also hard for brokers to discard what is familiar.

The next statements runs thus:

BUYERS ARE ADVISED THAT CERTAIN INFORMATION COMPILED PURSUANT TO THE SEX OFFENDERS REGISTRATION ACT, 1994 PA 295, MCL 28.721 TO 28.732, IS AVAILABLE TO THE PUBLIC. BUYERS SEEKING THAT INFORMATION SHOULD CONTACT THE APPROPRIATE LOCAL LAW ENFORCEMENT AGENCY OR SHERIFF’S DEPARTMENT DIRECTLY.

The Sex Offender Registration Disclosure recommends that a buyer should address the local police or sheriff’s office before viewing the sex offender’s site. Anna Gerlants explains that this ensures the public understands the sex offender site. A buyer will learn there are several levels of sex offenses. It is not always clear on the site if those listed are dangerous predators or not.

Finally, Anna Gerlants points out that there is a paragraph about taxes.

BUYER IS ADVISED THAT THE STATE EQUALIZED VALUE OF THE PROPERTY, PRINCIPAL RESIDENCE EXEMPTION INFORMATION, AND OTHER REAL PROPERTY TAX INFORMATION IS AVAILABLE FROM THE APPROPRIATE LOCAL ASSESSOR’S OFFICE. BUYER SHOULD NOT ASSUME THAT BUYER’S FUTURE TAX BILLS ON THE PROPERTY WILL BE THE SAME AS THE SELLER’S PRESENT TAX BILLS. UNDER MICHIGAN LAW, REAL PROPERTY TAX OBLIGATIONS CAN CHANGE SIGNIFICANTLY WHEN PROPERTY IS TRANSFERRED.

Anna Gerlants says that for years, ad valorem taxes were based on state equalized value. In 1995, a law change made state equalized value affect tax bills only in the first year of ownership. After the first year, the value of the property can increase by the lower of 5% or the consumer price index (CPI), a federal figure reflecting the percentage of inflation in the U.S. Anna Gerlants notes that after the first year, the tax increases will be limited for that owner. When the property sells, the taxes once again begin with the current state equalized vale and increase from there.

This explains why taxes on newly purchased property will be different from the seller’s. New taxes can be determined by finding the millage rate. The word “mill” in Latin means thousand and one mill reflects 1/1000 of a property’s value. Anna Gerlants explains, “If the millage rate is 45 mills or 045, the new tax amount can be found by multiplying the millage rate times 50% of the sale price.”

Information in the Seller Disclosure Statement is material information that a real estate seller must disclose. A buyer should ask his real estate agent to explain any of this information. Anna Gerlants believes if a buyer knows more about the buying process, he can ensure his agent is familiar with information that helps the buyer make wise decisions.

Anna Gerlants works in the Detroit real estate market.