PURPOSE OF REGULATION
PURPOSE OF REGULATION
When the Florida Legislature determined that the public needed protection when engaging in real estate transactions, it put several regulations, laws, and rules into place for that purpose. The purpose of all Florida real estate regulations is consumer protection.
Caveat emptor. Caveat emptor means “buyer beware” and signifies that buyers purchase properties at their own risk regarding the condition of the property. Florida subscribed to caveat emptor until 1985, when a buyer sued a seller for not disclosing the property’s defective roof. Under caveat emptor, the buyer would have been out of luck. However, the Florida Supreme Court ruled in favor of the buyer, thereby reversing Florida’s use of caveat emptor.
This ruling showed the need for further regulation in real estate sales and established that a seller has a duty to disclose known defects. As indicated in Chapter 455, Section 201 of Florida statutes, this ruling and subsequent rulings laid out that a seller must disclose defects if all four of the following elements are present:
- the seller has knowledge of a defect in the property
- the defect materially affects the value of the property
- the defect is not readily observable and is not known to the buyer
- the buyer establishes that the seller failed to disclose the defect
With caveat emptor, if the buyer asked, the seller was required to answer honestly. However, if the buyer didn’t ask, then the seller had no obligation to disclose. With this change of regulation, sellers are now required to disclose defects in the property whether or not the buyer asks.
