Seller's disclosure

A seller's disclosure is the written statement of known material facts a Minnesota seller must give a prospective buyer. It is governed by Minn. Stat. 513.52 through 513.60, and it replaced the old rule of caveat emptor for residential property.

The standard#

Good faith disclosure based on the seller's actual knowledge of conditions materially affecting the use or enjoyment of the property.

That framing does real work in both directions. A seller is not required to investigate, hire experts, or discover things they do not know. But a seller who knows about a recurring basement flood and says nothing has not made a good faith disclosure.

The timing#

Before signing the agreement to convey. Not before closing, not during the inspection period.

And it does not end there. Under Minn. Stat. 513.58, if the seller subsequently learns the disclosure was inaccurate, they must notify the buyer in writing as soon as reasonably possible — and in any event before closing — by amending the disclosure.

A defect that appears between signing and closing therefore has to be disclosed. Sellers frequently assume the obligation was discharged at signing.

Waivable and not#

This is the distinction most people get wrong, and it matters.

The general disclosure under 513.52 to 513.60 can be waived where the seller and the prospective buyer agree in writing. That happens routinely on as-is sales and investor purchases.

The specific statutory disclosures cannot be waived by the buyer — the well disclosure, the subsurface sewage treatment system disclosure, lead paint, radon, methamphetamine production, airport zoning information and the predatory offender registry notice.

So a buyer who has waived the general disclosure has not waived the well disclosure, and a seller who believes a blanket waiver covers everything is exposed.

Excluded transactions#

Minn. Stat. 513.54 exempts a set of transfers, including gratuitous transfers, transfers to a tenant already in possession, transfers to heirs, transfers between family members, court-ordered transfers, newly constructed property, and foreclosures.

That last exemption explains a great deal about distressed property. A bank selling a foreclosed house has no obligation to complete a general disclosure, and generally has no knowledge to disclose — nobody from the lender has lived in the house or seen the basement in March.

Buying foreclosed property therefore means buying without the information a normal sale provides, which is exactly why the inspection matters more there than anywhere else.

What need not be disclosed#

Minn. Stat. 513.56 removes certain matters from the duty entirely, and it also provides that where a professional inspection has been obtained and shared, common law duties relating to the inspected matters are affected.

A seller uncertain whether something must be disclosed should generally disclose it. The statute limits liability for disclosing; it does not limit liability for concealing.