Test: ‘Reasonableness’
To recover from their Seller for a home defect, Buyers must satisfy a two-part test.
Namely, they must prove that: 1) the defect existed at the time the Seller sold them the home; and 2) the Seller either knew of the defect, or should have known.
Which begs the question, “what should sellers know about their home?”
“Reasonableness” test
In such situations, courts — or arbitrators — typically apply a “reasonable person” test.
So, a reasonable homeowner would know that their basement flooded whenever it sprinkled.
However, it would be unreasonable to expect the same owner to know that their chimney cap needed to be replaced, especially if that wasn’t visible from the ground.
Critically for Buyers, Sellers — at least in Minnesota — do not have an affirmative duty to educate themselves about the presence in their home of such things as radon, asbestos, and lead-based paint.
Who’s the Seller?
Which leaves one more relevant factor in determining “reasonableness” — namely, who’s the Seller?
In particular, Buyers should beware of two types of situations where the Seller may “reasonably” not know of a major problem with their home.
One. Absentee owner.
An owner who spends part of the year elsewhere — and discloses that fact — isn’t going to know their home’s condition as well as one who has continuously occupied it.
Which is why one of the first questions the Minnesota Seller Disclosure form asks is whether the Seller has continuously occupied their home the last 12 months.
Two. Older owner.
An older owner who may be contending with health issues is also less likely to be on top of their home’s condition.
In fact, that may be a big part of the reason why they’re selling.
In either situation, the bar for Buyers recovering for a defect, post-closing, is higher than it would be otherwise.
Which is why such Buyers should be especially scrupulous determining the home’s condition beforehand.
home had 10 showings but hadn’t sold, a $10,000 price cut was in order.
