[WSBARP] HR 1951--Amendment to Seller Disclosure Statement

[Kary Krismer]

Back after Alejandre v. Bull came out I was critical of the decision, 
but I've come to appreciate both it and Douglas v. Visser a great deal, 
but that's because those decisions should (but somehow don't) encourage 
seller inspections.  And in fact I think very little about Form 17 when 
I think of those decisions. My recent Bar Bulletin article that touched 
on those cases didn't even mention Form 17.  Today I'd be reluctant to 
roll back that line of cases because today's market has proven we need 
something to encourage seller inspections--the message just needs to get 
out to sellers so that they again are more likely to allow inspections 
(and stop the problematic practice of seller inspections).

Accordingly I would agree with the second suggestions below, but not the 
third.  The first suggestion would raise the question of how a seller is 
to answer if they don't have actual knowledge.  Do they have to call in 
experts to advise them of every condition of the property?  That would 
lead to the same result this legislation might lead to--sellers simply 
not filling out Form 17 and risking buyers backing out.  The fourth is a 
bit too broad since it would virtually eliminate the need to ask any 
questions given the "other material defect" answer.

My suggestion is a more basic change that would be to still not require 
information obtained from inspections to trigger an amendment of Form 17 
for that particular transaction, but would expressly allow other 
information obtained from the buyer as well as a request from the buyer 
for an accurate answer, to trigger the need for an amendment so that the 
buyer could then back out.  So, for example, the buyer could point out 
question X wasn't answered, or question Y was answered correctly and 
trigger the need for an amendment (if true), allowing them to again able 
to back out for 3 days.

That would deal with the issue of sellers who put little or no effort 
into answering the questions, and also deal with the sellers who 
deceive.  Either would be at risk of the buyer backing out well into the 
transaction no matter the other terms of the contract.

Kary L. Krismer
John L. Scott, Inc.
206 723-2148

On 1/12/2022 5:42 PM, Catherine Clark wrote:
>
> I have alerted friends who work with brokers to the issue.  I’ll be 
> offering a report to the WSAJ (where I am also a member) as part of 
> its legislating efforts this year.  If you’d like your comments 
> included (either anonymously or with credit), please let me know.
>
> My thought is that while this is all a nice try, it doesn’t matter 
> because of the application of the economic loss rule (alejandre v 
> bull) and its molting into the independent duty doctrine.  Under 
> Carlisle homes, fraud survives such a challenge but negligent misrep 
> and innocent misrep were dispensed with.
>
> Seems to me that if you want to give the buyers some help, and limit 
> the impact of Douglas v Visser on Buyers (holding that where a buyer 
> has notice of a defect, they have a duty to make further inquiries of 
> the seller in a fraudulent concealment case; similar to the duty to 
> inquire if you find something funny recorded), you would do the following:
>
>  1. Remove the “sellers actual knowledge language”
>  2. Keep the “don’t know” option.
>  3. Add another section that a buyer of real estate may make claims of
>     fraud, negligent misrepresentation or innocent misrepresentation
>     as a way out of Alejandre et al.
>  4. Add another section that the buyer has the right to rely on the
>     statements made in the disclosure statement and need not inquire
>     further (this exists in the common law as I understand it when an
>     affirmative statement of fact is made—there are other cases on this).
>
> All comments welcome.
>
> Thank you.
>
> Catherine C. Clark
>
>
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