New Property Disclosure Legislation in LA Comes to Fruition

Effective March 1, 2018, the Louisiana Real Estate Commission has revised the Residential Property Disclosure form. The change is mainly in response to the Supreme Court opinion in Williams v. Nelson.* [1] The Property Disclosure Document is mandated by Louisiana law [2]*, and deals with the disclosure of known defects in the residential property.
 
The Residential Property Disclosure says: “The seller shall complete the property disclosure document in good faith to the best of the seller’s belief and knowledge…If the seller has no knowledge or information required by the disclosure document, the seller shall so indicate on the disclosure statement…” 
 
It continues stating: “A property disclosure document shall not be considered as a warranty by the seller. The property disclosure document may not be used as a substitute for any inspections or warranties that the purchaser or seller may obtain.  A seller shall not be liable for any error, inaccuracy or omission if it was not a willful misrepresentation according to the best of seller’s information, knowledge and belief.”
 
Prior to its revision, the form contained possible answers of “yes,” “no” or “no knowledge,” to the questions concerning the seller’s knowledge of defects in the property. The revised form only has possible answers of “yes” or “no knowledge.”
 
As stated earlier, this revision was the result of the Court’s opinion in the Williams case, which involved a sale of a property wherein the sellers were the Trustees of a Family Trust. The sellers filled out the property disclosure document and “checked the “no” boxes for each. But later, after defects were discovered, they claimed to have never been in a position to know of any defects that may have existed in the premises”*[3]. 
 
The Court’s opinion further stated: “Here, it seems the sellers wish to avoid being deemed to have declared that the thing sold had a quality (no defects) that they knew it did not have by claiming that they did not know, one way or another, because they were not in a position to know, whether the thing sold had defects or not (and thus their representation that the thing sold had “no” defects is excused). We do not believe that a seller can represent a thing to have no defects... Sellers cannot avoid their representation of no defects by claiming ‘we really didn’t know.’”*[4]
 
As a result, the Williams case was sent back to the District Court for further proceedings. No definitive judgment has been rendered concerning whether the Sellers’ checking the “no” boxes is equivalent to declaring the thing sold had no defects, as the Supreme Court indicated in its opinion.
 
Both Louisiana law as stated above and the preamble to the Residential Property Disclosure Document, state: “A property disclosure document SHALL NOT be considered as a warranty by the seller (that there are no defects in the property being sold).”
 
Nowhere on the Residential Property Disclosure form filled out by the Trustees in the Williams case did they declare that the property had no defects. They only indicated to the best of their knowledge and belief no such defects existed in the property being sold.
 
For more information, please contact Platinum Title.
 
*[1][more specifically LSA-R.S. 9:3196-3200,]
*[2]136 So. 2d 793 (LA 2014)
*[3]Id at 794.
*[4]Id at 795.