When a commercial property dispute arises due to the failure to disclose important information, it can have serious legal and financial implications. As a seller of commercial property, there is specific information that you must disclose to any potential buyers.
Failure to disclose lead-based paint
According to the Residential Lead-Based Paint Hazard Reduction Act, any seller of a residence built before 1978 must disclose the use of any known lead-based paint in the home. This act includes any commercial property transaction as well. Commercial real estate agents must also disclose information about lead-based paint to both buyers and sellers to ensure that each party is well-informed in regard to current regulatory practices.
Failure to disclose environmental hazards
Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commercial property sellers must disclose any potential environmental hazards that may be present on the property to prospective buyers. This disclosure includes hazardous materials or waste, contaminated soil, leaking underground storage tanks, and asbestos or radon gas. These hazardous materials can be the result of toxic chemicals from manufacturing processes, waste from agricultural operations, and abandoned underground tanks. Failure to disclose these hazards could result in both civil and criminal liability.
Failure to disclose zoning changes
Zoning changes are often overlooked when disclosing information during a commercial property transaction, but in the U.S., it is against the law to knowingly fail to disclose a zoning change that could affect the use or value of a property. If a seller fails to mention that their property is now in a newly-zoned floodplain, which significantly reduces its resale value, buyers can initiate costly legal battles based on their right to all material facts before purchasing a property.
Failure to disclose pending litigation
When a property is up for sale, the seller is obligated to disclose any and all pending litigation that may potentially affect the sale or the value of the property. This scenario covers anything from legal disputes with neighbors to class action lawsuits. For example, if the seller of a commercial property is in the middle of a dispute with their neighbor over a boundary line issue and they failed to disclose this information to a prospective buyer, they would be in violation of state law and could be subject to financial penalties. Instead, they should be open and transparent about the situation, making sure that potential buyers are aware of any possible litigation before signing any paperwork.
