“The Watcher” and Seller Disclosure

By now you have probably heard about the family in New Jersey allegedly being scared by a stalker who calls himself “the Watcher” clearly obsessed with the family’s new Westfield home. The Watcher has been after the family for the past year, ever since they purchased their new six-bedroom, $1.3 million home. Three days after buying the house, the family began receiving regular letters from the Watcher.

The family are suing the previous owners, claiming that they knew of the The Watcher’s letters but failed to disclose any information while selling the property. They still haven’t moved into the million-dollar house and don’t plan to. They also can’t sell the house because the Watcher is watching it, and now everybody knows it.

So, were the previous owners who sold their staulked home required to disclose this information to the buyers?

Jack Feinstein, a lawyer and director of the Rutgers Civil Justice Clinic at Rutgers Law School in Newark, said the sellers are required to disclose latent defects in the house, that involves such issues and termite infestation. This kind of claim, about a possible stalker, is something completely different, said Feinstein who has 40 years of experience in real estate law.

“I’ve never seen this kind of allegation,” He said of the claims in the lawsuit.

To make a case, the plaintiff would have to show how long the prior owners had known about the letters, and whether the messages appeared to be credible and could be taken as a serious threat, Feinstein said.

Charles Sullivan, a law professor at Seton Hall Law School, said some states have laws requiring the disclosure of tragic incidents that occurred in a house such as murders.

“There’s a duty on the part of the seller to disclose to the buyer any defect that would impact the marketability of a property,” Sullivan said about laws in those other states.

But New Jersey does not have such laws, he said. “There probably would not be a duty to disclose this,” Sullivan said referring to the letters in the Westfield case.

Whether you’re a buyer or a seller, here are six things you should know about real estate disclosures:

1. What is a disclosure?

Disclosure statements, which can come in a variety of forms, are the buyer’s opportunity to learn as much as they can about the property and the seller’s experience in it.

Potential seller disclosures range from knowledge of leaky windows to loud neighbors to information about a major construction or development project nearby. Not only do disclosure documents serve to inform buyers, they can protect the sellers from future legal action. It is the seller’s chance to lay out anything that can negatively affect the value, usefulness or enjoyment of the property.

Leaking windows — bad coincidence?

A buyer once called after the first rainstorm of the season. The windows in the master bedroom were leaking. We checked back on the disclosure documents from the sale and there wasn’t any mention of the leaks. Nothing showed up in the property inspection report at the time of escrow, either.

Unfortunately for the buyers, this is part of homeownership. This could be the result of something that was building over time. I thought that was the end of it. The same client called back a few weeks later. They had workers out to check on the siding. That prompted their neighbor to inquire what they were up to. According to the neighbor, the previous owner of my client’s property had the same siding issues and had discussed it with the neighbor.

Given this new information, it was clear the previous seller had not properly disclosed. The buyers do more investigation, got bids and understand what the issues were. Armed with the knowledge of the neighbor and the approximate costs, they went back to the seller, through his agent. Though it did not turn into a lawsuit, the seller took responsibility and the situation was resolved quickly and fairly.

But too often, the lack of proper disclosure can result in a lawsuit. We know of a story in which a buyer bought a house, with the seller disclosing that a kitchen renovation was done without permits. A few years later, that buyer went to sell the property but didn’t disclose that the previous owner had renovated the kitchen without a permit. The new buyer wanted to do some electrical work with a permit. The city inspector discovered that some things had not been done to code. The inspector dug deeper and realized that much of the kitchen renovation (both plumbing and electrical) was not to code. The new buyer was on the hook for ripping out the kitchen and doing it over. A lawsuit arose between the current owner and the second seller for not disclosing. The original sellers had covered themselves, but the second seller had not.

2. How does a seller go about making a disclosure to the buyer?

Disclosure laws vary from state to state, even down to the city and county level. California has some of the most stringent disclosure requirements. Often, sellers there are required to complete or sign off on over 50 pages of documents, such as a Natural Hazards Disclosure Statement, Lead Based Paint Disclosure, Advisories about Market Conditions and even Megan’s Law Disclosures.

Depending on where you live, sellers can be on the hook for what they disclose (or fail to) for up to ten years. I’ve seen agents and sellers take all types of approaches when dealing with property disclosures. More than anything, I always tell sellers to err on the side of caution. If you know it, disclose it. If you try to hide something, it can come back to bite you long after the sale and it is just not worth it.

Disclosure typically comes in the form of boilerplate documents (put together by the local or state Realtor association), where the seller is responsible for answering a series of yes/no questions detailing their home and their experience there.

Download the New Jersey State Seller Disclosure Form

Aside from the boilerplate documents a seller is required to complete, if there is any written (or sometimes verbal) communication regarding something negative about the property, it should be disclosed to the buyer. For example, there was a property for sale with a dispute over a tree on the property line and whose responsibility it was. The neighbor faxed a letter to the seller’s real estate agent documenting the dispute. This immediately became a disclosure item that both the seller and buyer needed to sign off on.

Bottom line: Disclosure statements are legal documents that can stand up in court.

3. What do sellers typically disclose to potential buyers?

The work and upgrades sellers have done to their property are a common disclosure, whether the work was done with or without permits. If done with permits, buyers are advised to cross check the seller’s disclosure with the city building permit report. Doing work without the city signing off with a permit is a key disclosure. If the work was not approved by the city, it may not have been performed to code and may cause a fire or health hazard. Buyers should independently investigate any non-permit work that was done.

Other common disclosures include the existence of pets, termite problems, neighborhood nuisances, any history of property line disputes, and defects or malfunctions with major systems or appliances. Disclosure documents often ask sellers if they are involved in bankruptcy proceedings, if there any liens on the property, and so on. Failure to disclose can result in a messy conflict with the buyer after the sale.

Some disclosure documents are very detailed. For instance, among the questions posed by the San Francisco Association of Realtors disclosure statement are:

  • Is there any non-tempered glass on shower or sliding doors?
  • Have there been any unusual odor problems in the neighborhood?
  • Was there any death on the property in the last three years?

RELATED: Disclosure Legality When Selling a Home

4. Is a disclosure the same as an inspection? Are the two related?

A disclosure is something given to the buyer by the seller documenting their knowledge of the property. It is not the same thing as an inspection; because there are things the seller may not be aware of that an inspection brings to light.

This is why a property inspection should always be done by the buyer while in escrow. The inspector will check the property out from top to bottom, many times verifying what the seller has disclosed but sometimes bringing to light new issues. Often, we will see sellers hire a property inspector before going on the market. It seems backwards, but this is the sellers’ opportunity to hire an independent party to inspect the property, in case they missed or were not aware of something.

5. When does the buyer typically receive a seller’s disclosure statements?

In most markets, disclosure documents are provided to buyers once the seller has accepted their offer. In addition to their inspections or loan contingency, the buyer has an opportunity to review the seller’s disclosures. If the buyer discovers something negative about the property through disclosure, he can usually back out of the offer without losing his escrow deposit.

In some markets, sellers provide these disclosures to the buyers even before they receive an offer. Some sellers prefer to have buyers know everything they need to know up front. This is also smart because it saves everyone time, hassle and expense by preventing deals from falling apart once they’re in escrow.

Buyers are required to sign off on disclosure documents and reports. So it’s important to review them carefully and ask questions if you need to.

Furthermore, most disclosure laws require that you disclose information beyond basic facts about the state of repair of your home. Toxic mold, unused old fuel oil tanks buried in your yard, and termite damage must be disclosed in many states.

And because lead paint has become a concern in older homes – built before 1978 – federal law requires that sellers must disclose any information they know about the possibility of lead paint in the home. That means that if you’ve had tests done on the paint, you must disclose the results. If you know only that your house was built before 1978 and that it has not been painted since, you must also disclose that.

6. It’s a Local Thing: Disclosure in New Jersey

Disclosure sounds daunting, and it should be taken seriously. But don’t think of it as an obstacle to selling your home. And don’t think of it as a legal quagmire. Sellers who immediately offer potential buyers a written disclosure report generally get an excellent response from buyers, who like the idea that the seller isn’t trying to hide anything. Couple the state-required disclosure report with a report from a certified home inspector, and you’ve just added to the desirability of your home. It helps if your home is in perfect shape. But even if it’s not, buyers will appreciate your honesty.

Disclosure Tips:

  • Get a copy of your state’s disclosure form. Most states now have them on a Web site for easy access and downloading.
    Download the New Jersey State Seller Disclosure Form
  • If you have a real estate agent or lawyer, have them help you with any questions you have about the form. If you’re selling on your own and you really are baffled by the state’s disclosure form, you can always pay an experienced real estate agent or lawyer for 30 minutes of their time to help you fill out the form. In general, however, the forms are not complicated and they’re not intended to be tricky.
  • Full disclosure upfront is the way to go. In some ways, providing full disclosure can actually help a seller. As a Realtor reviewing disclosures with potential buyers, I like to see a comprehensive set of disclosure documents. It shows that the seller is thorough and upfront. This goes a long way toward giving buyers peace of mind, and in this market, anything you can do to move buyers off the dime is worth considering.

Your Turn

What do you think about the Watcher? Should the seller have disclosed this information? What should the buyers do now? Tell us in Comments, on Facebook or on Twitter. And don’t forget to subscribe to the Patrick Parker Realty monthly eNewsletter for tips, guides and articles like this delivered straight to your inbox.

Note: The views and opinions expressed in this article do not necessarily reflect the opinion or position of Patrick Parker Realty.