Question: We recently learned there was mold in our house. We spent a lot of money correcting it, using a licensed mold remediator. Now, we plan to put the house on the market and our real estate agent is not sure whether we have to disclose this problem. What do you suggest?
Answer: Many states throughout this country -- including Maryland, Virginia and the District of Columbia -- have laws requiring sellers of residential properties to disclose known conditions within the house.
However, the laws differ widely from state to state. For example, in the District of Columbia, a seller must disclose everything about the property that he knows is -- or even may be -- defective. In Maryland, on the other hand, sellers can take the position that they will refuse -- i.e. disclaim -- making any disclosure, and leave the buyer to inspect the house and make up his/how own mind as to the property condition.
It should be noted, however, that the Maryland legislature recently amended the seller disclosure law. Effective last October, even if a seller decides to disclaim disclosure, any latent defects of which the seller has actual knowledge must nevertheless be disclosed.
The law defines "latent" as: a material defect in real property or an improvement to real property that: "(1) a purchaser would not reasonably be expected to ascertain or observe by a careful visual inspection of the real property, and (2) would pose a direct threat to the health or safety of ... the purchaser or ... an occupant of the real property, including a tenant or invitee of the purchaser."
Thus, before you decide to sell your house, you must obtain the appropriate form for the jurisdiction where your house is located. Ask your real estate broker or attorney for a copy. Some states have decent websites where these forms are also available.
Read the form carefully. If you have questions, do not complete it until you get answers -- and make sure those answers are from knowledgeable professionals.
You have completely remediated your house of mold. But were the conditions which caused the mold corrected? It is my understanding that many mold remediators only treat the symptoms, but not the cause. They may not do any of the structural changes which are necessary to insure that no further mold can develop..
Let's pose this question: You fill out the seller disclosure form and state that there is no mold present in the house. However, less than one year after closing, your buyers discover that mold is again growing in your old house. The buyers then learn that you have attempted to remediate the house. I suspect that if the cost to totally cure the problem is high enough, the buyers will consider filing a suit against you for damages and misrepresentation.
The buyers will argue that you merely did a "band-aid" job, in order to sell the house. If the house is located in the state of Maryland, they will also take the position that this was a latent defect, which should have been disclosed under the new law.
You, of course, will claim that your disclosure statement was, in fact, accurate, because at the time of the disclosure, there was no mold.
This is not an easy question to answer. Ultimately, a jury may have to determine who is right.
Clearly, you do not want to subject yourself to prolonged, expensive litigation.
What should you do? I recommend that you disclose on the form that you did have a mold problem, but that it has been remediated. You should also provide potential buyers with pictures before and after the problem has been corrected, and a copy of your contract with the abatement company. Most professional companies will provide you with a report which shows what the problem is, how it is to be corrected, and what has been done to remove the mold. The report will also contain information and statistics on the air samples in your property.
This may, of course, turn off potential prospects. You may have to escrow some money for a period of time or reduce the asking price in order to make a sale. However, in my opinion, this is the safest course to take, especially in this day and age when everyone wants to sue everyone else.