Wednesday, November 30, 2022 / by Amy Brown
BUYER BEWARE!!!! Dun, dun, duhhhhhhh, sounds pretty ominous right? It doesn't have to be.
Real estate transactions differ from state to state. So what is "normal" for Florida, New York, or Virginia is going to be different from a sales transaction in North Carolina. One of the biggest denominators in NC real estate law is the latin phrase "caveat emptor", or "let the buyer beware".
What this means is that the burden is on the buyer to determine everything that there is to find out about a property prior to closing. It is also true that if there is something discovered after the fact, there is no recourse for pursuing damages from the seller after the close of the sale.
So I have been asked, What about the residential property disclosure?
The residential property disclosure in NC has an extra blank. It is labeled "No Representation". Below is an example of a blank form and you can see the extra column on the far right.
What that column means is that either the seller does not know or they choose not to disclose that information. And yes, it is legal to do so. All buyers are required to sign this form, acknowledging that they have received it upon making an offer.
Most sellers will respond with a yes or no, but in some cases you will see no representation marked. This isn't necessarily a red flag, it just means that more investigation on the buyer's agent will need to occur to make sure that no issue exists.
If you do see a residential property disclosure with only "no representation" marked the entire way down all 4 pages, then this could indicate a red flag. Most commonly, this is marked this way by investors and house "flippers" so that they can avoid all liability. This means extra careful and super diligent investigation practices throughout the due diligence period and asking a lot of questions.
What items can a seller be liable for in NC?
1. Heated square footage - a seller cannot state and a real estate agent cannot advertise that a home has a certain square footage unless it is heated by a conventional heating system (not a portable heater or a fireplace or woodstove), finished (has walls, floors, and ceilings of an interior construction material and a ceiling height of 7'), and is directly accessible from other living areas (through a hallway or door).
2. Health and safety issues - if a home is built prior to 1978, a lead based paint addendum will be attached to the listing documents. A buyer must be given notice that there COULD be lead based paint in the home due to the age and given the opportunity to investigate. Also, a buyer must be notified if there is asbestos, toxic mold, KNOWN radon, or if the home was ever used as a meth lab.
3. Mineral, Oil, and Gas Rights - this is a disclosure that is a part of every residential home sale but is usually only applicable on larger acreage type parcels where natural resources could be mined. What this disclosure states is that the seller has not or has no knowledge of the sale of natural resource rights to any third party. In NC, these would most commonly be timber rights. In addition to the disclosure, your NC real estate attorney will also research this item going back at least 30 years.
4. Future construction or highway projects - This includes proposed roadways and developments and pending community litigations - situations that could affect buyers through increased fees, property loss, and lifestyle changes. If any exist in the immediate vicinity, they must be disclosed.
5. Natural hazards - If a parcel is located inside of a flood zone or flood plain, it must be disclosed.
6. HOA assessments and covenants - All information about an HOA needs to be disclosed, including contact information, annual assessments (dues), amenities included, restrictions, and what all fees cover.
How is a buyer protected in NC?
Your best weapon in NC is your real estate agent. You really need to be picky about who you choose to represent you because it could mean a loss of thousands of dollars and many months, if not years, of headaches if you purchase a home with issues.
What should your agent be looking for?
1. Lot lines - your agent should be well versed in the county's geographic information system and know how to use it well. They should know how to look at an aerial view, measure property lines, and look for possible encroachments which impact the property legally and will influence resale.
2. Comparable sales - your agent should be able to research the prior sales history of the home and know how to compare that to recent sales in the neighborhood. They should also know how to compare that to your area's market in general and be able to advise you on a strong offer strategy presentation.
3. Basic construction quality - the best agents will be able to identify quality construction techniques vs. shoddy ones. While that is not their expertise, an agent with basic construction knowledge should be able to alert you to potential issues at the initial showing; saving you time and money by putting down non-refundable deposits on a home that is going to come back with a bad inspection report.
4. Zoning, restrictions, and historic districts - your agent should be able to let you know the regulations that control the property under the county's specific zoning category. They should also alert you to any restrictions that carry with the deed; including HOA covenants and perpetual deed restrictions. Also, any property in an historic district will be under city regulations determining remodel parameters which you need to know prior to purchase.
5. Future development - your agent needs to inform you of any future projects; most specifically DOT projects that may affect properties bordering an affected road. No one wants to purchase a home that may have some or all of their property taken by eminent domain. Your agent should be an expert on what is happening in the surrounding community and able to give you information on what that community will look like into the coming years.
Knowledge is key to buying real estate in NC and whether it is me or someone else that you use to assist you, please make sure that you vet them well before making your choice. A solid agent on your side will save you money, anxiety, and loads of time by helping you make a confident and wise home selection.