Is the Seller at Fault for Improper Disclosure in South Carolina?

Question from Sam, Is the Seller at Fault for Improper Disclosure in South Carolina?

Answer from AI:

When dealing with real estate transactions, especially commercial properties, disclosure obligations are crucial. In South Carolina, sellers have specific duties to disclose material facts about the property, including any special assessments that may affect the buyer’s decision.

Disclosure Obligations in South Carolina

In South Carolina, sellers are generally required to disclose known material facts about the property. This includes any special assessments that have been passed or are pending. The South Carolina Residential Property Condition Disclosure Act (S.C. Code Ann. § 27-50-10 et seq.) outlines these requirements, although it primarily applies to residential properties. For commercial properties, similar principles of disclosure apply under common law and contractual obligations.

Key Points in the Scenario

1. **Special Assessment Passed**: A special assessment was passed for repairing two buildings, and estimates were given for these repairs.
2. **Violation of Master Deed**: The assessment violated the master deed by holding owners of units in one building responsible for repairs to another building.
3. **Seller’s Disclosure**: The seller disclosed that the HOA Board proposed to assess the entire regime but did not disclose the specific amounts, despite knowing the estimates.
4. **Buyer’s Due Diligence**: The buyer asked for a 30-day extension to investigate the assessment but found no information due to the HOA’s unresponsiveness.
5. **Post-Closing Assessment**: After closing, the buyer was assessed by the HOA and paid three installments before joining a lawsuit with other unit owners.
6. **Mediation Outcome**: The mediation resulted in the HOA keeping the money paid by the buyer and agreeing not to make the buyer responsible for the other building’s repairs.
7. **Buyer’s Lawsuit Against Seller**: The buyer sued the seller for improper disclosure, claiming the seller did not disclose the costs of the special assessment.

Legal Considerations

1. **Material Facts**: The seller’s knowledge of the special assessment estimates could be considered a material fact that should have been disclosed to the buyer.
2. **Duty to Disclose**: If the seller knew the specific amounts and did not disclose them, this could be seen as a failure to fulfill their duty to disclose material information.
3. **Buyer’s Due Diligence**: The buyer took steps to investigate the assessment but was unable to obtain information due to the HOA’s lack of response. This may impact the case, as the buyer showed diligence in trying to uncover the information.
4. **Legal Precedents**: Case law in South Carolina, such as *Clayton v. Lands Inn, Inc.*, 465 S.E.2d 372 (S.C. Ct. App. 1995), emphasizes the importance of disclosing material facts in real estate transactions.

Potential Outcomes

– **Seller’s Liability**: If the court finds that the seller had a duty to disclose the specific amounts of the special assessment and failed to do so, the seller could be held liable for damages.
– **Buyer’s Damages**: The buyer may be entitled to recover damages, including legal fees and loss of income, if the seller is found at fault.

When to Seek Legal Advice

Given the complexity of real estate transactions and disclosure obligations, it is crucial to consult with a legal professional for personalized advice. A real estate attorney can provide guidance based on the specific facts of the case and relevant laws.

Resources

For more information on disclosure obligations and real estate laws in South Carolina, you can refer to:
– [South Carolina Code of Laws](https://www.scstatehouse.gov/code/title27.php)
– [South Carolina Bar Association](https://www.scbar.org/)

Remember, this information is for general guidance only and should not be considered legal advice. Always consult with a qualified attorney for specific legal issues.