The Washington Seller Disclosure Statement has been a huge failure since its passage on January 1, 1996. Why is this important? If you are a buyer, you might expect that you are protected by the Washington Seller Disclosure Statement, which requires the seller to disclose all defects of the property.
Having practiced as a real estate lawyer for 20 years, I can tell you that the Washington Seller Disclosure Law and the Form 17 Seller Disclosure Statement does not protect you from seller misrepresentation, whether it is intentional or unintentional. But you ought to know how you are effected as a buyer or as a seller.
Washington Seller Disclosure Statement Law
When the wise politicians of the state of Washington passed the Washington Seller Disclosure Statement law in 1996, I remember saying, “This law will have no beneficial effect for buyers at all.” The reason I said that was because you cannot legislate honesty. Our courts are just as full of seller misrepresentation lawsuits today as they were before this law. If a seller is going to lie about a defect in the house that is not clearly visible to a buyer, that same seller will simply mark “Do not know” on the disclosure statement on that question. By answering “Do not know” the seller eliminates the buyer’s ability to prove they did know. The rules of evidence do not help. You can’t prove what someone knew or did not know in their head. This is a no brainer. Unfortunately, the politicians who passed the seller disclosure law and the lawyers around the state of Washington who continue to support new laws and subtle nuances to contract language addressing seller disclosure are . . . “smart by half” as the saying goes. As I have said in other articles, one should be cautious about people who claim they are going to protect us, especially when those people are politicians and lawyers.
Washington Seller Disclosure Statement Issues in the P&S
In an earlier post I wrote extensively about the requirement that Washington real estate forms (the NWMLS forms) include a line 9 in the Purchase and Sale Agreement with an option for a buyer to sue or not sue a seller for the tort of misrepresentation. Lawyers around the state decided that the NWMLS needed to includ
e a line 9 in the Purchase and Sale Agreement in which the seller agreed or disagreed to be sued by the buyer for what could be unknowing or unintentional negligence about some aspect of the property. Leave it up to the lawyers to come up with a check box in which a seller can agree or disagree to be sued! This was a huge legal boondoggle that confused real estate agents (not to mention buyers and sellers) around the state and generated more lawsuits for lawyers. Read my full analysis of line 9 and seller misrepresentation at Washington Seller Disclosure Statement.
Now we have a new case, which is forcing the NWMLS (Northwest Multiple Listing Service) to delete line 9 in the Purchase and Sale Agreement. Two recent cases decided by the Washington State Supreme Court have given the NWMLS the opportunity (or obligation) to delete line 9. Line 9 required that the parties negotiate whether or not the buyer could sue the seller for negligence in completing Form 17. The new Court decisions now require courts to analyze the facts of each case and decide whether or not the buyer has a claim for negligent misrepresentation against the seller, rather than barring such a claim automatically under the “economic loss rule.” This whole issue of seller misrepresentation and disclosure is a pot of gold for lawyers and legislators. It’s a gift that keeps on giving, but not to consumers, not to buyers. Buyers don’t benefit at all. Amazing. And the whole justification of the law is to protect buyers.
For buyers there is a way to avoid this whole nightmare of whether or not a seller is misrepresenting the property. It is not to rely on a form with simple questions and check marks that can be evasive. It is not to assume anything or to be forced to rely upon the word of a seller you don’t know. The key is to hire a good real estate buyers agent and to hire a good home inspector. It is critically important that your buyers agent has the experience to recognize potential red flags so they can be examined in more detail by a professional. Experience and wisdom will guide you and your professionals and reveal any red flags or potential issues of concern. In other words, if there is a problem with the property, you need to find it yourself with professionals to assist you. That is truly the best and most effective way to buy a home and be protected.
Are Real Estate Agents Liable for Seller Misrepresentations?
In Washington State real estate agents are specifically protected from any buyer claims of seller misrepresentation. The state law is RCW 64.06.020, and states, “THE FOLLOWING ARE DISCLOSURES MADE BY SELLER AND ARE NOT THE REPRESENTATIONS OF ANY REAL ESTATE LICENSEE OR OTHER PARTY. THIS INFORMATION IS FOR DISCLOSURE ONLY AND IS NOT INTENDED TO BE A PART OF ANY WRITTEN AGREEMENT BETWEEN BUYER AND SELLER.”
Real estate agents are told not to complete the Form 17 Seller’s Disclosure Statement for the seller, and they should not even help them complete the answers. Otherwise, they could open themselves to liability to a buyer for any intentional misrepresentations.
Is It Hard For a Buyer To Win a Lawsuit for Misrepresentation Against a Home Seller?
It is extremely difficult for a buyer to win a misrepresentation lawsuit against a home seller. The burden of proof, the rules of evidence, and trying to prove what the seller knew and didn’t know, is nearly impossible. As an attorney I represented buyer’s in such lawsuits, and I will tell you judges are extremely reticent to rule against a home seller unless the trail of proof is so blatant and the damages so egregious, that they feel they have no other choice.
One of the reasons Sellers will check the “Don’t Know” box on so many of the questions on the Form 17 is because it avoids liability in most cases. If they check “Yes” or “No” to any question, they are making a representation that could come back to haunt them, but if they check “Don’t Know”, how could a buyer ever prove they knew in their heads but made misrepresentations anyway?
Can a Buyer’s Agent Help Avoid Seller Misrepresentation?
A good buyer’s agent cannot prevent a seller, who he does not represent, from misrepresenting a property, but a stellar buyer’s agent can help make sure his buyer does not step into a trap for the unwary. This is where knowledge, experience, and discernment come into play, and a buyer will be well advised to hire a great home inspector who can help him recognize potential problem areas. In addition, a professional buyer’s agent can recommend due diligence the buyer should do to discover problems not explicitly revealed in the Seller’s Disclosure Statement.
The Washington Seller Disclosure Statement does not protect buyers as intended but buyers can still protect themselves with honest, experienced, and professional advice. This article was first published in December of 2010, and here we are almost 10 years later and everything here still applies, although I have added a couple of small updates. Now you know about Seller Disclosure Statement, aka Form 17 in the State of Washington.
Last Updated on September 10, 2020 by Chuck Marunde
We are in the process of buying a home and the seller has marked everything I don’t know. One question is on flooding on the property. Ironically it is flooding as we speak so with a picture can we not prove they are liars? Since they clearly said they didn’t know yet they are living through it? They have lived in the home for 5 years, it floods every year, as we live next door. I understnd not getting into someones brain but they live there the property is under water isn’t this a no brainer to prove the lie?So if they are lying on this what else is a lie?
ANSWER: I feel your pain Lisa. The Form 17 Seller’s Disclosure Statement in Washington is a politician’s answer to pretending to solve all the voters problems with seller misrepresentation. It hasn’t solved anything. See my articles on “Seller’s Disclosure Statement” or search “Form 17” on my blog.
Lisa,
I don’t know if it’s too late to help, but a good – thorough – home inspector, as Chuck pointed out, is one of those who can help limit your unknowns. The inspector should enter, “tour” as I call it, the crawl space, attic, and any accessible concealed areas, as well as take the time needed to look at and test the home’s major systems. The inspector should communicate his/her findings effectively and encourage questions. These are basics, but follow-through is big. A relevant example: if the inspection takes place in the middle of a dry summer, an inspector could easily miss signs of seasonal flooding if he/or she simply pokes a head into the crawl space – instead of continuing in and crawling to the far corner where rot and staining from previous flooding might be located.
In Washington State do you have to Disclose that a Homocide took place in the home?
No Brandon, you do not.
We purchased our home and decided we wanted to fill in a irrigation ditch knowing that this ditch was useless but contact them about to see what to do to legally do this. We live out on a small piece of farmland. Well come to find out there is a right of way on our property (we were aware of an easement do to the other ditch) had NO idea there was a right of way. So now we find out we can’t even build on our property plus since owned by the Federal Government they can come in and take all our property if needed. So now what? The BLM has sent us all the legal documents on this and the Realtors act as if they didn’t know anything. Can you tell us what steps to go thru. We are so upset that we purchased this property now. We would have never ever purchased it if we had know this. We went thru a Mortgage Broker and had it inspected plus went thru a Title Company. Yet this was sold to the US and the BLM said we cannot build on our property. So now what? What legal rights do we have!! Thanks for any help you can give us. We thought we went thru all the right channels before the purchase.
Becky, There are at least a half dozen legal issues involved in your situation, and some of them involve very complex legal issues. It would probably be malpractice to even try to answer your questions without spending two hours just gathering all the facts and documents. You need to see an experienced real estate attorney. That’s the answer for now.
After a septic inspection, I realized that there are several things the inspector missed in his report. Since the report doesn’t mention the damage to the septic system, the seller’s agent is saying, “System is fine, functions normally,” and refusing to acknowledge what I have noticed. Is this misrepresentation?
Kevin, hiring a good septic inspector is critical. The answers you get are only as good as the questions you ask, so the inspector must raise the questions (issues) and make a buyer aware of potential problems. Due diligence is everything. Lawsuits are costly, a nightmare of stress, and often a total waste of time and energy.
Please whoever is consulting on here do not tell people it’s a waste of time and $$ to sue these fraudulent people. That’s the reason people continue to lie on form 17s. The more people make others accountable on form 17 the less and less they will lie. Trust me WA state has horrible consumer protection laws. In state of TX if you are caught lying on form 17 you are liable and can be sued. People don’t try it cause the lawsuits are large and do cost a lot.
I suggest always talking to several attorneys and if you feel u have bern lied to by your buyers agent, inspector and the previous owner u need to look into it further. Just because 1 case was done wrongful in WA state shouldn’t keep people from making owners accountable.
Until we all start fighting back we all are screwed and “BUYER BEWARE” attitude will eventually cause potential real estate issues down the road. If I had known it was a buyer beware state I would have passed on purchasing here and moved to a state that cares about its people regardless of real estate frenzy!
Sarah, you have a good heart and I love your thinking, but you unfortunately are wrong. The world does not work like you wish it did. I only know this because I was a real estate attorney for 20 years, and I argued in a dozen Washington County courthouses over issues like seller misrepresentation before the Form 17 Disclosure Law (Jan 1, 1996) and after the law was in effect.
The practical reason I suggest avoiding litigation is because our justice system is broken beyond what people even think. Thousands, of Washington residents have hired attorneys to sue a seller for misrepresentation, and we have the final court decisions in Superior Courts around the state as well as in the recorded Appellate records, and some went all the way to the Washington Supreme Court.
Here’s what you’ll discover when you study those cases, which I have, and more than that, I’ve litigated fraud and seller misrepresentations.
First, the odds of winning a case of misrepresentation against a seller is extremely low, because our system is severely broken. You can be sure the lawyer representing the lying seller will vociferously lie about the facts to the judge. In fact, in such a case, good clients who were the buyers and who are suing will find the seller and the seller’s attorney making up gross lies about them and swearing under oath on the witness stand that their statements are true. I cannot tell you how many times I’ve seen this Sarah.
The Washington Rules of Evidence will keep some evidence out that you know is true, but procedurally it never gets to the judge. Can you imagine how frustrating this was for my clients? There are both substantive and procedural issues that hinder the ability of a plaintiff to overcome a defendant’s smoke and mirrors. There are rules of pleading that govern what and when something can be done or allowed in a trial. Many argue the way judges manage this process plays out in favor of defendants, and that would be correct almost all the time.
Second, the cost of litigation is far more than most people who have never litigated realize. For example, the time I’ve taken to think through and draft and edit this response multiple times is at least an hour.. If you had an initial meeting with an attorney as a plaintiff in a seller misrepresentation case, you could easily spend two hours with that attorney. That would be $500 to $1,000, depending on the attorney. Then he will take all the documents of your case and study them. That’s probably another $3,000. Then he would do legal research to be able to advise you as to your options. That would be $3,000 to $6,000.
We haven’t even got started yet on attorney’s fees. A case like this can easily cost $100,000 in attorney’s fees and take one to 2 years to litigate at the Superior Court level. If you want to appeal it to the Washington Appellate Court, add more fees and another 2 years.
Then you have to add costs, apart from attorney’s fees. There are fees for interrogatories and depositions with the people who must record those in compliance with court rules. They all want to be paid. There are copying fees for what usually turns out to be thousands of pages, because copies have to be provided to multiple parties every time. You would have expert witness fees, and they usually charge a couple of thousand each day they testify.
Sarah, are you beginning to understand why an experienced attorney would discourage people from litigating? When we are young, we are idealistic, but the older we get and the more experience we get, we begin to understand how to choose our battles. Many of my clients told me after a year of litigation that they were on the verge of divorcing each other after 40 years of marriage.
You see, there’s a lot more involved than teaching a seller a lesson that you probably will not be able to teach them anyway. I haven’t even gotten into how the seller who is a narcissist cannot ever be taught a lesson, even if they lose. There’s so much more to this subject, but I’ll stop here.
Well written article that has aged well!
I was interested in a property in an unincorporated King County I’m intimately familiar with (family lives in the neighborhood).
The house was purchased early in 2021 and “flipped” with a complete to the studs remodel, converting a bedroom to a bathroom, and perhaps moving the kitchen location. My realtor sent me the disclosure and other documents and the seller checked off “No” to each of 4C, 4C(1), and 4C(2) on form 17:
“Have there been any conversions, additions or remodeling?”
“if yes, were all building permits obtained”
“if yes, were all final inspections obtained”
I investigated further and found that NO permits were issued, despite this almost certainly needing one. Furthermore, I’ve discovered code enforcement is aware and has started the process of confirming if there is a violation.
So firstly, 4C is clearly a lie, and one documented in the NWMLS (just compare the two listings). They bought it distressed and then fixed it up. Since they said “No” to 4C, they should have left (1) and (2) blank, but they also checked that as “No” which I guess could give them wiggle room to say “Hey we said permits were not obtained!”?
Anyway, I WAS interested in this property, but the red flags are really adding up. The remodel appeared to be good quality, but it certainly seems it wasn’t done on the up and up. The seller is also a short lived LLC (just created for this purchase), so I suspect any lawsuit would have limited funds to go after.
At this point, it’s an academic exercise, but I’m wondering if in this case the Seller would be liable to a potential buyer to remedy the situation (or at least disclose the violation in process)?
To me this seems so blatant, I would hope the judge would side with any unsuspecting buyer. However, ultimately, I suspect the buyer won’t get any great resolution ($) given the LLC?
What if a buyer finds out about the code violation after mutual acceptance, but BEFORE closing? I would assume that gives them the right to back out of the deal, and get back their earnest money?
No doubt a buyer would have a legitimate reason to not close, and they would be entitled to sue after closing, but such lawsuits are hard to win even if all the facts and law are on your side. But the other issue in any lawsuit is this. If there is a cause of action, and if there is sufficient evidence, and if a judge issues a judgment, then there is the question of damages. If a buyer has not suffered substantial damages that can be proven, the whole exercise would be futile, especially since the vultures, I mean attorneys, will get their money in wheel barrels.
I purchased a home from a seller who stated to me when asked if the home had an infestation of any kind: “No. Well, you know, an occasional field mouse.” On their form 17 they signed “No” to existing or previous infestation. Home inspection did not reveal an infestation. However, after the purchase infestation was heard almost immediately. Pest control pulled back all of the fixtures (which the home inspector said he could not move according to liability) and there was an immense infestation under everything. Bats flew from the rafters and mice gnawed all day and night – drove me to utter despair! All the seller had to do was sweep away droppings before inspection and nothing would be seen. I located an extermination company the seller contacted and have on photographic record the company’s representative’s screen shots requesting extermination of rodents – one month before the Form 17 was signed. Do I have recourse? I developed diagnosed PTSD and on doctor’s recommendation had to leave the house. I lost a fortune and now deal with acute tremors and am unable to conduct myself as a professional musician 2 1/2 years later. Is there a winnable case here, or does buyer beware thwart my ability for a claim of fraud? There seem to be two legal issues: 1. real estate fraud, and 2. personal injury. I live in Washington State. I have already invested in legal help but as a real estate matter am unable to proceed beyond a personal injury case on contingency basis. Unlike many of the cases that I have read about the buyer had recourse based upon evidentiary knowledge to investigate further and due to this was not awarded in court. In my case, “oh an occasional mouse” sounds less like a warning but as a skilled liars way of covering their bases. Clearly at the time I had no reason from their statement to be concerned. In retrospect I trusted them, and the Form 17, much to my chagrin. Only if fixtures were permitted to be moved and examined there would have been no way to know there was an infestation. Even new insulation was placed in the crawl space to hide the infestation. Do I have a winnable case here or do I just need to pick up the pieces and move on? Feeling much despair over this. I have moved out and now live in a new home but am under the 3 year statute of limitations on personal injury. I have all medical diagnoses from doctors.
Scott, I recommend you read my long answer to the previous commenter’s question, because I get into what it takes to sue a seller and the cost and stress involved, but more importantly as you’ll see in that answer, the odds of winning a seller misrepresentation case in Washington are slim to zero. And by the way, expect to pay north of $60,000 in attorney’s fees.