Buying a Home? Get to Know the Real Estate Condition Report
John J. Laubmeier
Buying a home is the largest financial decision a typical person makes. There are many issues that require a lot of the buyer’s time and attention, such as locating the right house, obtaining financing, figuring out the logistics of moving, and often selling the buyer’s current house. One issue that must not get lost in the shuffle is accurately determining and evaluating the condition of the house you will be buying. All too frequently, buyers discover “surprises” about their new house within weeks or months of moving in, such as water in the basement, roof leaks, or mold.
To reduce the risk of unwanted surprises, it is critical for the buyer to obtain and review the seller’s Real Estate Condition Report (the “Condition Report”). Under Wisconsin law, a seller of residential real estate who has lived in the property being sold must provide the buyer with a Condition Report. The Condition Report is a statutory form that includes approximately 30 statements related to the property; such as “I am aware of defects in the roof” and “I am aware of defects in the electrical system.” The seller then checks, “yes,” “no,” or “n/a” (not applicable). The Condition Report provides an opportunity for the seller to explain any “yes” responses.
The following are some practical tips for buyers regarding the Condition Report:
- Always obtain and review the Condition Report prior to submitting your Offer to Purchase. A Condition Report is typically provided to prospective buyers in advance of the buyer submitting an Offer to Purchase. However, under Wisconsin law, the Condition Report can be provided to the buyer up to ten days after the acceptance of the Offer to Purchase. Always obtain and review the Condition Report prior to submitting the Offer to Purchase because it may contain information relevant to what you would be willing to pay for the property, or changing your decision to purchase the property at all. This can also help prevent mentally considering the home “yours” before obtaining all information that you may need to make an informed purchase decision.
- Check the date on the Condition Report. Sellers frequently complete the Condition Report when they put their home on the market. If a home has been on the market for a year or more, the Condition Report may be a year or more old. If the Condition Report is not current, ask the seller to complete a new Condition Report. An issue may have arisen since the seller’s completion of the Condition Report that the seller does not even realize is undisclosed.
- Be leery of “fixed” or “repaired” defects. Sellers rarely disclose ongoing leaks, mold, or water problems in the basement. However, sellers fairly frequently disclose defects which the seller characterizes as “fixed” or “repaired.” If the Condition Report discloses “fixed” or “repaired” defects, follow up with the seller to ascertain what exactly was done to fix or repair the prior defects and by whom. In addition, ask the seller to represent in writing how long the defect has been fixed or repaired. A “repaired” basement wall that has not leaked for six years would likely give a buyer more comfort than a “repaired” basement wall that has not leaked for six months.
- Share the Condition Report with your home inspector and/or attorney. If the Condition Report discloses defects related to the physical condition of the home, share the Condition Report with your home inspector. This will allow your home inspector to pay particular attention to any identified current or prior defects. If the Condition Report discloses potential legal issues such as boundary disputes, easements, encumbrances, or a joint driveway/well, consider obtaining the advice of an attorney.
- Understand the limitations of the Condition Report. By its nature, the Condition Report is limited by the honesty of the seller. If the seller misrepresents the condition of the property on the Condition Report, you may have legal recourse against the seller. However, such recourse can be time consuming and expensive. Therefore, the Condition Report is not a substitute for a thorough inspection of the property by a qualified and reputable home inspector. In addition, sellers who have never lived in the property, such as personal representatives or banks, are not required to complete Condition Reports.
If you have any questions about how the information in this article may affect you or your business, please contact John Laubmeier at firstname.lastname@example.org or (608) 257‑2281 or your Stroud attorney.
DISCLAIMER: The information in this article is provided for general informational purposes only, is not necessarily updated to account for changes in the law, and should not be considered tax or legal advice. This article is not intended to create, nor does the receipt of it constitute, an attorney-client relationship. You should consult with your own legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.