Deborah Kling
Deborah Kling
Team Leader

The Whole Truth: The Legal Risks of Partial Disclosures in Property Sales

The Whole Truth: The Legal Risks of Partial Disclosures in Property Sales

The Whole Truth

When a seller discloses property information, they could face liability if they share only part of a story and leave out negative details.

ORLANDO, Fla. – Before people speak in formal hearings like a trial, deposition, or Realtor Code of Ethics hearing, they are usually sworn in. The oath they are required to say, out loud, includes a promise that the testimony they are about to give will be “the truth, the whole truth, and nothing but the truth.”

You may wonder why they couldn’t just say “tell the truth” and be done with it. The point of the repetition is to drive home the message with clarity. Telling just a partial truth, while leaving out key information, is not okay. Only “the whole truth” is acceptable.

This is a broad principle of law that has many applications. The specific application we hear about most on the Florida Realtors Legal Hotline is when sellers want to skimp on details when providing a seller’s disclosure. They may have two different inspection reports and ask if it’s okay to just hand prospective buyers the more positive report – and never mention they have another report that alleges additional defects. Or they may want to boil a longstanding problem down to a simple statement, “There was an issue, which we addressed.”

In the case Hinton v. Brooks, 820 So. 2d 325 (Fla. 5th DCA 2001), the sellers sold the residential property to buyers. They offered seller financing to cover some of the purchase price, so after closing, they also had an ongoing relationship as lender and borrower. Eventually, the buyers failed to make payments on the mortgage, and the sellers sued to foreclose.

As part of their defense to the foreclosure action, the buyers alleged that the sellers had committed fraud in the inducement and had unclean hands – an affirmative defense to justify why they weren’t current on mortgage payments. The trial court ruled in favor of the sellers and issued a final judgment of foreclosure.

The buyers appealed. They argued that their affirmative defense was valid and should have been considered by the trial court. Specifically, they said the sellers failed to tell the whole truth about termite damage, noting in their disclosure statement “caretaker reported activity and Massy [Pest Control] treated same.”

While that statement was true, the whole truth was that between the years of 1992 and 1997, the home had been treated for termite infestation twelve different times.

The appellate court agreed with the buyers. They held that the buyers relied on misleading information before signing the contract and that the allegation was that the sellers committed fraud in the inducement. The case was reversed and remanded back to the trial court.

When sellers prepare property disclosures, they should take that job seriously. If their memory is fuzzy about details, they should review any documents or correspondence to refresh their memory. If they had work done over a few years, they should write out a timeline. And when they present a disclosure, it should be as thorough, complete, and accurate as they can make it.

Joel Maxson is Associate General Counsel for Florida Realtors
Note: Information deemed accurate on date of publication

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