An Indiana residential real estate purchase agreement (“Contract for Sale and Purchase of Real Estate”) is a contract which commits a buyer to an offer to purchase real estate, according to specific terms agreed by the buyer and seller. Negotiated specifics include the purchase price, financing method, closing date, and more.
Do Sellers in Indiana Have To Disclose Property Defects?
Indiana does require real estate sellers to disclose any material defects with a property, but state law is complicated on the specifics. In most cases, disclosure is done through a standardized disclosure form provided by statute, but any disclosure which provides the required information is valid.
While a property condition disclosure is required by law, Indiana applies a “caveat emptor” (buyer beware) rule when it comes to the accuracy of any disclosures. This places the full burden of checking the property’s condition on the buyer, as long as the buyer has a reasonable opportunity to do an inspection.
For example, if the seller says the condition of the roof is fine, and the buyer can perform a roof inspection but doesn’t, the buyer won’t be able to sue or reverse the purchase if the roof later turns out to have structural issues. Indiana courts have held that the buyer has full responsibility to do diligent inspection, even when the seller fraudulently misrepresents the state of a property.
Exceptions to the Disclosure Requirement in Indiana
Indiana does not allow waiver of the basic duty to disclose, unless the sale falls under a recognized legal exemption. The following common transfers, among others, are exempt from the disclosure form requirement:
- Court-ordered sales and transfers
- Sales by foreclosure or other debt default
- Transfer as part of the execution of a will or estate
- Transfer to a purchaser who will not use the property for residential purposes
- Transfer to a spouse, parent, or child
- Transfers to or from a government entity
Required Seller Disclosures in Indiana
Indiana sellers of residential real estate must make the following disclosures, as appropriate, to meet legal requirements for a real estate purchase agreement:
- Seller’s Residential Real Estate Sales Disclosure: Discloses material defects with a property that are known to the seller at the time of sale, and details any potential issues and conditions that may affect the value of the property.
- Homeowners’ Association: If the property being sold falls under the rules and regulations of a Homeowners’ Association, the seller is legally obliged to supply the prospective buyer with all governing documents pertaining to the organization.
- Lead-Based Paint Disclosure: Any home constructed earlier than 1978 must come with a disclosure upon the transfer of the property which includes any information about the presence of lead on the premises, as well as educational materials that communicate the health risks associated with lead exposure.
Sources
- 1 Ind. Code § 32-21-5-10
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(a) An owner must complete and sign a disclosure form and submit the form to a prospective buyer before an offer for the sale of the residential real estate is accepted.
(b) An appraiser retained to appraise the residential real estate for which the disclosure form has been prepared shall be given a copy of the form upon request. This subsection applies only to appraisals made for the buyer or an entity from which the buyer is seeking financing.
(c) Before closing, an accepted offer is not enforceable against the buyer until the owner and the prospective buyer have signed the disclosure form. After closing, the failure of the owner to deliver a disclosure statement form to the buyer does not by itself invalidate a real estate transaction. A buyer may not invalidate a real estate transaction or a contract to purchase real estate due to the buyer’s failure to sign a seller’s disclosure form that has been received or acknowledged by the buyer.
Source Link - 2 Ind. Code § 32-21-5-8
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An owner may prepare or use a disclosure form that contains the information required in the disclosure form under section 7 of this chapter and any other information the owner determines is appropriate, including whether the subject property is located in a regional sewage district.Source Link
- 3 Dickerson v. Strand, 904 N.E.2d 711, 715 (Ind. Ct. App. 2009)
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Even as to fraudulent representations operating as an inducement to the sale or exchange of property, the purchaser has no right to rely upon the representations of the vendor as to the quality of the property, where he has a reasonable opportunity of examining the property and judging for himself as to its qualities.
Source Link - 4 Ind. Code § 32-21-5-1(b)
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This chapter does not apply to the following:
(1) Transfers ordered by a court, including transfers:
(A) in the administration of an estate;
(B) by foreclosure sale;
(C) by a trustee in bankruptcy;
(D) by eminent domain;
(E) from a decree of specific performance;
(F) from a decree of divorce; or
(G) from a property settlement agreement.
(2) Transfers by a mortgagee who has acquired the real estate at a sale conducted under a foreclosure decree or who has acquired the real estate by a deed in lieu of foreclosure.
(3) Transfers by a fiduciary in the course of the administration of the decedent’s estate, guardianship, conservatorship, or trust.
(4) Transfers made from at least one (1) co-owner solely to at least one (1) other co-owner.
(5) Transfers made solely to any combination of a spouse or an individual in the lineal line of consanguinity of at least one (1) of the transferors.
(6) Transfers made because of the record owner’s failure to pay any federal, state, or local taxes.
(7) Transfers to or from any governmental entity.
(8) Transfers involving the first sale of a dwelling that has not been inhabited.
(9) Transfers to a living trust.
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