In the old days, the principle of caveat emptor (let the buyer beware) applied to most real estate transactions. It was the buyer’s responsibility to thoroughly inspect a building or piece of land before purchasing. The trend over the past few decades has been to require sellers to disclose significant defects.
Most states now have fairly rigorous disclosure laws for real estate sales and require sellers to fill out a disclosure form listing known problems. Some states exclude from disclosure requirements patent defects – obvious problems that a conscientious buyer can plainly see or uncover without digging too deep. Disclosure laws generally apply to real estate agents as well. If you ask them a factual question about a property, you can expect a factual answer, to the best of their knowledge.
As laws vary considerably from state to state (California requires sellers to disclose recent deaths on the property and neighbors’ barking dogs), and may differ for buildings and vacant land, it makes sense to bone up on the real estate disclosure laws for your state. Whether or not the law requires such disclosures, it is generally a good idea to make disclosure of material defects a contingency of your offer – ask your lawyer about the specifics in your state.
Most states now have laws requiring sellers to disclose any material defects (those that may affect the value of the property) that they are aware of. However, the burden is still on you, the buyer, to verify what you are told – and to determine if there are problems the seller is not aware of or is hiding. Maybe you can sue later based on the seller’s failure to disclose that the lot was formerly used as an auto dump and needs an expensive cleanup of toxic soil, but you probably have better things to do with your time and money.
The law distinguishes between patent defects, which could be discovered by the buyer through a reasonably thorough investigation, and latent defects which are hidden. Buyers are generally expected to discover patent defects on their own – another reason why you need to conduct a thorough investigation of a piece of land before making a bid.
Hidden environmental problems can carry high costs for cleanup, as well as potential liabilities. If you buy a piece of land with toxic waste, it becomes your responsibility to deal with it. If you have reason to believe that other structures existed on the land in the past, or that it was used for farming or industrial purposes, ask the seller to provide a signed statement certifying that the land is free from toxic materials, buried tanks, or other buried items or materials.