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In an age when it seems like everyone is on social media sharing everything about their lives, it should not be surprising to find that this behavior has begun to disrupt real estate transactions — but probably not in the way you may think.
Social media is a great way to advertise real estate listings and real estate services. I think most people in today’s world of real estate marketing would agree with that statement. It is also, however, a way for members of the other side of your transaction to “spy” on you. The ability to digitally monitor individuals without their knowledge has provided an opportunity for real estate buyers to confirm or refute information that may or may not have been disclosed to them throughout the course of a transaction.
Many states in the U.S. have some form of disclosure law, regulation(s) requiring a home seller or licensed real estate professional to disclose certain facts with regard to a property’s condition to which they have knowledge. Even in states that do not have seller mandated disclosure, there are often regulations in place requiring real estate agents to bear that responsibility.
Enter social media. How many times have you seen a friend, colleague or family member take to social media to rant about a water leak in their roof or a contractor who has done a sloppy job? The emotional relief from getting that negative energy off your chest feels wonderful at the time, but through that post, a seller may be setting themselves up for big problems down the road.
There are so many different groups, apps, friend pages, business pages, contact circles and chat sequences, and all of these areas are ripe for perusal. Depending on the state in question and to what degree a seller is held to the state’s disclosure standards, the mention of a problem with a homeowner’s property on social media and a subsequent absence of that problem on a seller’s disclosure statement, even if they believe that problem is resolved, can lead to major issues.
Being in Florida, an issue I see quite often relates to air conditioning systems (HVAC). In new construction today, I see HVAC systems sized to accommodate the average cooling or heating load over a full year rather than addressing either end of the extreme. It gets pretty hot in Florida, and in the summer, virtually every HVAC system in the state is running at full capacity to try to fight against high temperatures.
Because an “average” cooling load won’t account for those extreme few months in the summer, HVAC systems tend to run all the time, and because they are being pushed to their limits, sometimes they have problems or altogether break down. When this happens, homeowners become frustrated, and some take to social media to vent those frustrations. A recent issue I witnessed involved this very situation.
This particular homeowner had purchased a new construction home a few years ago. From the time they originally closed through the date they sold, they had constant HVAC issues. They discovered early in their ownership that both systems installed by the builder were three-ton units and, from several visits by varying HVAC contractors, were informed that larger four-ton units would have been more appropriate given the size of the home. In this instance, the units were not able to keep the home at the desired temperature in the summer months and would freeze, causing them to fail regularly.
When it came time to sell in the winter months, the owner did not include this information within their seller’s disclosure statement and, at the time of the property’s inspection and sale, the HVAC system was working.
Fast forward a few months to the heat of the summer. The HVAC system was constantly failing, and the new owner started interviewing several HVAC contractors to try to identify a solution to the problem.
Here is where the problems for the original owner really kicked in. The new owners joined the local neighborhood app. As it turns out, the former owner never left the group, and all of their posts from the previous year venting about HVAC problems remained intact in their full ranting glory. Coincidentally, one of the HVAC contractors engaged by the new owners happened to be the contractor who told the previous owners that their units were undersized.
Double whammy: Not only did the new owners now have direct defect-related information from the previous owners; they received corroborating evidence from the licensed HVAC contractor who diagnosed the original issue.
In Florida, the standard from a 1986 case, Johnson v. Davis, says that “where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer.”
In this case, the HVAC issues were not readily observable because the system was functioning at the time of inspection in the spring, and the buyer would not have otherwise known that this issue existed. When presented with this information by the new owners’ legal counsel, the former owners elected to settle for the cost of a full HVAC system replacement and payment of legal fees, almost $20,000 in total.
In general, it is always wise to consult with a real estate attorney to understand your individual situation and approach disclosure from an honest position. It is also wise to avoid any unnecessary public discussion regarding your property. You may have a small issue that never creates a problem, or you could have a complete catastrophe.