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Tennessee has long
required certain disclosures when a residential property is sold. Some of these disclosures are found in T.C.A.
§ 66-5-201 et. al. The 2015 Tennessee legislature has now added the
additional requirement that all sellers of residential real property disclose
the presence of any known sink hole on the property. See Public Chapter
262. This must be
done in writing and prior to entering into a contract with the purchaser of the
property. Under the statute, the term
“sink hole” is defined as follows:
(2) For purposes of this section, “sinkhole”:
(A) Means a subterranean void created by the dissolution of limestone or
dolostone strata resulting from groundwater erosion, causing a surface
subsidence of soil, sediment, or rock; and
(B) Is indicated through the contour lines on the property's recorded
plat map.
This new statute went
into effect on July 1, 2015 and takes effect for all contracts entered into on
or after that date. This new statute is
found in TCA § 66-5-212. As a result, it
is important for sellers of real property to inform purchasers of sink holes on
their property. If the seller of real
property does not make this disclosure (as well as other required disclosures)
the purchaser has certain remedies under Tennessee law. Specifically, TCA § 66-5-208(a) provides as
follows:
(a)
The purchaser's remedies for an owner's misrepresentation on a residential
property disclosure statement shall be either:
(1) An
action for actual damages suffered as a result of defects existing in the
property as of the date of execution of the real estate purchase contract;
provided, that the owner has actually presented to a purchaser the disclosure
statement required by this part, and of which the purchaser was not aware at
the earlier of closing or occupancy by the purchaser, in the event of a sale,
or occupancy in the event of a lease with the option to purchase. Any action
brought under this subsection (a) shall be commenced within one (1) year from
the date the purchaser received the disclosure statement or the date of
closing, or occupancy if a lease situation, whichever occurs first;
(2) In
the event of a misrepresentation in any residential property disclosure
statement required by this part, termination of the contract prior to closing,
subject to the provisions of § 66-5-204; or
(3)
Such other remedies at law or equity otherwise available against an owner in
the event of an owner's intentional or willful misrepresentation of the
condition of the subject property.
As a result, it is
very important to make proper real estate disclosures under Tennessee law to
avoid a lawsuit over improper disclosures. These requirements now include sinkholes. Also, even though the definition of a
sinkhole appears to be rather narrow, I would not want to risk non-disclosure
of a sinkhole even if it does not meet the technical definition.
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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