To Disclose or Not to Disclose: a Seller’s Dilemma.

A seller’s duty (or not) to disclose a fact about his or her house for sale can be a legal minefield.  The form contracts residential real estate agents use provide little, if not questionable, guidance, and the law in Arizona is conflicting.  The Arizona Court of Appeals has not made the decision for sellers any easier.  It recently ruled in Lerner v. DMB Realty/Currier that while the seller is not liable for refraining from telling the buyer that the home is located near a sex offender, there can be a claim for fraud – for affirmatively making a false statement.  When asked why they were moving, the Curriers told the Lerners they wanted to be closer to family.  After closing, the Lerners discovered they were living next door to a sex offender and sued the Curriers and their own agent for _______.   Arizona Revised Statute 32-2156(A)(3) prohibits a civil law suit against a seller for “failing to disclose” the house is located “in the vicinity of a sex offender.”  The Court upheld the constitutionality of the statute.  However, it went on to find that the statute was limited to claims for failure to disclose, but did not bar liability for making a false statement, misrepresentation, or otherwise engaging in fraud.  Given the varied case law on this issue, and in light of Lerner, wise sellers will consult legal counsel before deciding whether to disclose…or whether to avoid meeting the buyer altogether.