nvsupremecourt.jpgThe 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.