What, exactly, is a material fact, as pertains to a real estate transaction? I’m glad you asked! A material fact is some information that *significantly* affects the value, desirability, utility, enjoyment, or safety of a property. Obviously, that means a material fact could be just about anything – or does it? For example, if there’s a scratch on some hardwood floor, is that a material fact? What if it’s a foot-long, deep and wide scratch right in the middle of the room, vs. a 1″ scratch that’s hardly noticeable in some dark corner? Do both scratches require disclosure?
When you’re selling real estate, all known, significant material facts must be disclosed to the buyer. If there is material fact that you don’t know about, you don’t have to disclose it. But in the case of these scratches – you know about them, do you have to disclose both of them? What if you fail to disclose them, and the buyer feels that the scratch (or whatever) defect is in fact a “significant” item?
This is how sellers wind up having problems after the sale, because they fail to disclose items that the buyer ends up feeling is in fact a “material” issue that should have been disclosed. Right or wrong, the buyer may choose to go after the seller after closing for resolution of these “minor” issues.
The answer? Be very thorough when you are filling out the disclosure forms! If you have a question about something, “Does this need to be disclosed?” – the answer is YES, disclose it. It is very rare that a buyer will decide to pass on your property if you disclose a nick here and a scratch there – but they will often freak out if they discover these “minor” defects on their own, after the sale. So sellers – protect yourselves! Disclose, disclose, disclose.