Real Estate Nightmares; Real Estate Disclosures

In the Michigan Realty series “Top Real Estate Nightmares” this article explores 3 real estate disclosure nightmares and the court cases that followed to solve the problem. Seller’s disclosures are critical to ensuring a smooth transaction, and over time new cases come up where disclosure… or many times non-disclosure, becomes a serious real estate nightmare.

Be Honest in your Real Estate Disclosures.

Real Estate Case #1

In the case of “Johnson v. Davis”, the Davis family (buyers) went into contract with the Johnsons (sellers) without having been disclosed that the roof leaked whenever it rained. In fact, the Johnsons said the opposite to invoke the buyers to make the last of 2 deposits in the transaction. The court ruled that sellers must disclose any facts materially affecting the value of the property which are not readily observable and are not known to the buyer. This case set a precedent for future real estate transactions. Read More.

Real Estate Case #2

In “Stambovsky v. Ackley”, the seller failed to disclose that the house was reputedly haunted. The seller had at one time made public the claim that the house was haunted in a Reader’s Digest, but never mentioned this during the sale of the property. As you can imagine, this scared the buyers. (Sorry it was a cheap joke.) The court ruled that the seller should have disclosed this information, as it could affect the property’s value. This case is often referred to as the “Ghostbusters ruling” and is a staple in law school property courses. Read more

Real Estate Case #3

In “Hill v. Jones”, the seller failed to disclose termite damage. Having told the buyer that the damage they see is likely water damage, only for the buyers to later find out the sellers had hired termite control multiple times previously. The court ruled in favor of the buyer, stating that the seller had a duty to disclose this information. Read more.

Final thoughts about Disclosures

Providing real estate disclosures is as much for the buyer as it is for the seller. Protecting yourself in the transaction is the most important thing you can do to avoid these real estate nightmares. Disclosures protect you and so to lead by example, here is a disclosure from us:

As you already might know MichiganRealty.org is not providing you with real estate advise or legal advice in this article and we recommend that you speak with a real estate professional or attorney if you’re looking for real estate or legal advice. Thank you for reading this Real Estate Nightmare, a new article coming soon.

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