Please ensure Javascript is enabled for purposes of website accessibility

Moss/vine covered home with green door and windows

In the State of Florida, seller so residential property have the duty to disclose all known facts that materially affect the value of the property which are not readily observable to the buyer. This duty applies whether or not the contract between buyer and seller specifically states that it is an “as is” purchase contract.  Notwithstanding the fact that the duty to disclose is a common law duty that supersedes what is agreed to in a the purchase contract, the FR/Bar “As Is” Residential Contract for Sale and Purchase includes disclosures by seller(s) and specifically states “seller knows of no facts materially affecting the value of the property which are not readily observable and which have not been disclosed to the Buyer.”

The common law duty to disclose is directly addressed in the Florida Supreme Court case of Johnson v. Davis, 480 So. 2d 625 (Fla. 1985).  Florida Statutes chapter 475 extends this duty directly to real estate brokers and real estate agents selling properties, so that they too must disclose of such facts, known to them, that materially affect the value of a property they are listing for sale.  Jensen v. Bailey, 76 So. 3d 980 (Fla. 2nd DCA 2011) has further clarified Johnson v. Davis, by ruling that a trial court improperly held the seller(s) to a “should have known” standard to establish liability, where the Court in Johnson v. Davis required actual knowledge of the defects.

The moral of the story is that the safest practice, for both residential seller(s) and the Realtors listing their properties, is to disclose all issues with the property to the buyer(s) to avoid any potential post-closing liability.  The law does require an element of materiality to bringing an action and ultimately finding sellers and/or Realtors liable, but it’s typically not worth the risk of having to defend a lawsuit, to assume whether or not a Court would find a lack of disclosure to involve a fact that would materially affect value.  Certainly things like roof leaks, plumbing leaks, drainage or flooding issues, sinkholes and termites should be disclosed as those items typically are not readily observable and generally carry significant costs of repair.  If you have any questions about your liability as a seller or realtor in a residential transaction, it would be best if you consult a Florida Bar licensed attorney, but in the case of the duty to disclose, it’s always safest to disclose everything.


Financing Contingency Revisions:

April, 2017 – the FR/BAR “As Is” residential contract for Sale and Purchase (the “Contract”) received significant revision, primarily focusing on Section 8(b) which is commonly known as the Financing Contingency provision.   The proposed and ultimately adopted revisions, are intended to update the Contract to match the evolution in lending standards following the mortgage crisis and meet the reality of the modern lending process.  The first two (2) changes below, reflect the drafting committee’s desire to meet the aforementioned lending practices, while others shift responsibilities and/or address common loopholes that were being abused by buyers in residential transactions.

  1. The latest revisions to the Contract address the departure from written loan commitments, as mortgage lenders rarely ever issue such a written commitment anymore.  The committee has replaced Loan Commitment and Loan Commitment Period with Loan Approval and Loan Approval Period.  Loan Approval is now meant to include verbal approval from lender to buyer, acknowledging the buyer’s ability to close on the property with funding from the lender.  Further, Buyer is now required to use “diligent effort” to secure such loan approval, and failure to do so shall be considered a default under this version of the Contract, see below.


  1. The default period to secure loan approval has been reduced from forty-five (45) days, if not otherwise specified, to thirty (30) days.  As lending institutions have become more proficient with Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosures Act (“TRID”), the there is no longer a need for such a long loan approval period.  The Contract now requires Buyer to send written notice of Loan Approval to Seller upon receipt.


  1. As stated above, the Contract now requires Buyer to use “diligent effort” to obtain Loan Approval.  Diligent Effort is later defined as including “timely furnishing all documents and information and paying of all fees and charges requested by Buyer’s mortgage broker and lender in connection with the mortgage loan application.”  But the Contract also provides that “diligent effort” is not limited those things, thus, it would be safe to assume a reasonable person standard to diligent efforts.  A “reasonable person” seeking loan approval would likely be required to communicate regularly with their loan officer but what else could or should required of a reasonable person exercising diligent effort?  That surely will be the subject of litigation moving forward but its hard to tell how courts will interpret this provision until such time as cases have moved through the appellate courts.  It is clear however that “diligent efforts” requires something more than just paying fees and timely providing information to your mortgage broker or lender.


  1. If Buyer can obtain Loan Approval within the specified time period, buyer must deliver written notice to Seller, as was the case with the Loan Commitment, provided for in previous versions of the Contract.  Now, however, if Buyer is unable to obtain Loan Approval, Buyer may either provide notice to Seller of its failure to obtain loan approval and intent to cancel the contract.  If Buyer fails to provide such notice, the contingency is thereby waived.  This change represents a significant difference from previous versions of the Contract, wherein Buyer retained the right to cancel the contract until seven (7) days prior to the Closing Date.  Now, if Buyer fails to provide Seller notice of its intent to cancel the contract or is unable to secure an extension to its financing contingency period, Buyer is thereafter locked into the contract and subject to forfeit his or her deposit in the event they are unable to close due to lack of funding.  Buyers and their agents need to pay special attention to this change as it may result in significant losses, in the event it is ignored when using the new Contract.