The 1995 disclosure law which gave us the Sellers Real Property Disclosure Form (S.R.P.D.) has been addressed by the Nevada Supreme Court.
The Ruling
On July 26, 2007, the Nevada Supreme Court ruled on NRS 113. The full case posted by clicking ===> HERE
I invite you to read the case. As a REALTOR®, you will be intrigued how far this case went from one direction to the next. The quick story is that the Seller had a material defect occur in her home and reported it to her homeowner’s insurance. The insurer accept the claim and the repairs were performed by a licensed contractor. Later, the Seller sold the home but did not report the material defect on the SRPD because it was repaired and no longer a defect. Within months of the sale, the Buyer learned, via a CLUE report, that a previous insurance claim had been made on the property. Ultimately, the Buyer filed suit against the Seller for ‘non-disclosure.’ The Seller lost at trial but appealed the matter to the Nevada Supreme Court. The Nevada Supreme Court declared that the issue was whether the Seller was required under NRS 113 (SRPD) to disclose the previous damage. The lower trial court ruled that the Seller should have disclosed the previous damage. However, the Nevada Supreme Court overruled that decision and declared, “Once the [damage] was repaired … it no longer constituted a condition that materially lessened the value or use of the [home. Accordingly, [the Seller] did not have a duty to disclose the …. damage.”
The Court continued that the Seller must “realize, perceive, or have knowledge of [the] defect or condition.”
The Court concluded, “a seller of residential property has a duty to disclose only those conditions that materially and adversely affect the value or use of the property, and of which the seller is aware, realized, perceived, or knew. Because repaired …. damage does not constitute a defect under NRS 113 and [the Seller] did not know of the presence of [a defect], she did not violate the disclosure requirements contained in NRS 113… when she completed the SRPD.” Now that’s good law!
This is very helpful for us. Many times, I am questioned if a previous defect, which is now repaired by an appropriately licensed repair company/person, must still be disclosed. My answer has always been, not technically, but you should disclose as a precautionary measure. Well, now we have some legal authority from the Nevada Supreme Court to support what we have preached. This ruling is good for the industry, sellers, buyers and agents as a whole. By clarifying the rules on disclosure, we can better assist our clients.
CLUE reports and their ramifications are complicated and I share that portion of the facts just to keep it accurate. However, do not focus on that portion of the case for the ruling on the disclosure is the most important issue.
August 14, 2007 at 12:19 pm
I do have a question about repairs made by the owner instead of a licensed contractor. If the repairs were completed by the homeowner in a professtional manner,would it still need to be disclosed in the SRPD?(I would disclose anyway if it were me.)
August 15, 2007 at 5:39 pm
Very, Very interesting! I guess that’s what Caveat Emptier is all about. I hope this means we don’t have to add a new page to the SRPD! If it went the other way I bet we would!
August 18, 2007 at 10:51 am
Lorree raises an interesting question in her comment of 8/14. My follow question: In view of the Nevada Supreme Court’s decision in Nelson v. Heer and its affect on the Seller’s Real Property Disclosure (SRPD), should a Seller still disclose a previous defect if the work was completed by “Uncle Buck” or the Seller, and not by a licensed Nevada professional?
August 22, 2007 at 9:27 am
The question of mold? If mold was remediated and the home was given a clean bill of health, do we need to disclose?
August 22, 2007 at 6:25 pm
In reply to Debbie Primack – When you ask, “do we need to disclose?” Are you referring to the Seller or the agent(s)? If you’re referring to the Seller, the current SRPD asks the Seller about “previous or current” water damage (see: SRPD # 1(a) or fungi/mold (see: SRPD # 7). It’s my belief that until the SRPD is revised, the Seller should continue to answer the question as presented. If we, as agents, advise the Seller of the Nevada Supreme Court ruling, and suggest they do otherwise, I think we’re venturing into the unauthorized practice of law.
August 24, 2007 at 11:23 am
We, my husband & I, are buying a home that we are living in. We agreed to buy the home AS IS, that area just being to put the new roof on. However, in the last 3 weeks, since moving in we have found several major problems, re: major plumbing, and major electrical. I have reported these things to the seller who says he will have this repaired. After waiting for him to send an electrician and plumber for 2 weeks now we have not yet signed the final papers. Are there any laws to protect us. Just exactly what AS IS covers is what I would like to know.
August 24, 2007 at 4:16 pm
As Is, in pure form, does not require the Seller to repair any item that is discovered during escrow, nor does it allow the Buyer to cancel per NRS 113. But ensure the buyer has notarized this waiver, or NRS 113 remains valid.
August 8, 2009 at 5:34 am
What if the as-is agreement was signed by the buyer, but the material defect that was not disclosed, at the time of sale, is that the residence itself cannot be classified as real property and therefore the property as a whole is only considered improved land by any lender? Is there any recourse for the buyer in this case, or is there another regulation that would disallow it?
September 3, 2010 at 5:48 pm
[…] New Clarification of Real Estate Disclosure Laws in Nevada, August 10, 2007 […]
July 25, 2011 at 1:06 pm
As of recently, the NRS 113 waiver is not required; see my blog on this topic:
http://www.trulia.com/blog/mfleysher/2011/07/nrs_113_waiver_don_t_do_it_2
August 16, 2011 at 1:23 pm
new issue: my nephew recently purchased a home in Nevada and subsequently found that the HOA had not been paid by the previous owner for 7 months – and the HOA put a lien on my nephew’s house. What is his recourse?
September 30, 2011 at 2:16 pm
[…] should not affect the August 7, 2007 entry on disclosure – New Clarification of Real Estate Disclosure Laws in Nevada. Remember in that case (the Nelson Case), the Nevada Supreme Court ruled on the scenario where a […]
October 24, 2011 at 6:03 pm
[…] Nevada S.R.P.D. New Clarification of Real Estate Disclosure Laws in Nevada […]
March 15, 2012 at 3:24 pm
[…] Nevada S.R.P.D. New Clarification of Real Estate Disclosure Laws in Nevada […]
November 6, 2012 at 4:40 pm
I purchased a home and the home has never had a septic permit, what are my rights?
March 5, 2013 at 1:41 am
Thanks for finally talking about >Nevada S.R.P.D.
New Clarification of Real Estate Disclosure Laws in Nevada |
Nevada Residential Real Property Law <Loved it!
April 24, 2013 at 11:28 am
[…] Nevada S.R.P.D. New Clarification of Real Estate Disclosure Laws in Nevada […]
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