Wooden Foundation, Does the Seller Need to Disclose?

A realtor posted a story about a potential material defect that wasn’t disclosed to a future buyer. And that created a big question. In this story, they said they had a client that was going to buy a property. And during the due diligence, during their inspections, they found out that there was an addition on the home and the floor of the home was placed on top of a wooden foundation, rather than like a concrete slab or something like that.

And so that was one of the reasons that their buyers decided not to purchase the property. And they disclosed this information with the seller, and then within a month or so, the home did sell to another buyer, whom they heard through the grapevine was not made aware of the wooden foundation that was under the addition. Is that a lack of disclosure that would make the real estate agent liable and the owner liable for failing to disclose a material defect?

Does This Count as Something that Needs to be Disclosed?

And so the question comes in, is the wooden foundation up to code and is it failing in any way? We know that wood doesn’t last as long as concrete and that, structurally, it will need replacing sooner. But if it’s not breaking down right now, and if it’s not against building code, then it wouldn’t probably technically be considered a defect.

So that’s definitely some subjectivity there of whether that would need to be disclosed. Some more information would be helpful to solve this, right? But the Utah real estate purchase contract specifically says in the seller disclosures in 7(j) that the seller must disclose any building code violations. And in this story, they said that they didn’t get permitted for the work.

Permits for Renovations to be Up to Code

It’s very possible that this wasn’t up to code. I’ve dealt with houses myself where there were parts added on, usually additions done by the owner, and they didn’t get permitted. They built it without permission, and the city doesn’t know about it until it’s discovered.

And so, for example, in one home I was working on, they needed some electrical work updated. But they weren’t able to do the electrical work because the city wouldn’t permit it, because the addition where the electrical wires were located was not built up to code.

And so, if you find that in a transaction that the seller didn’t disclose something like that, something that wasn’t up to code, if they’re using the Utah real estate purchase contract, it’s very clear that that must be disclosed. And even if they’re not, something that’s not built to modern building code standards could potentially be considered a defect. So that’s something you’ll want to watch out for with your buyers and with your sellers on the disclosure side.

So, protect yourself, protect your sellers and protect your buyers. Get good inspections. Disclose what you can, make sure everyone goes into the transaction with their eyes wide open, and everyone will be happier at the end.