What You Don’t Know CAN Hurt You: Michigan’s Seller Disclosure Act

If you are selling a home in Michigan — or thinking about it — you need to be aware of Michigan’s Seller Disclosure Act (SDA), MCL 565.951 et seq. This law imposes real legal obligations on sellers, and failing to meet them can expose you to costly litigation long after the closing table is cleared. For investors and house flippers in particular, the risks are even greater and often underestimated.

Before you sell, make sure you are doing it right.

What the Seller Disclosure Act Requires

Under Michigan law, sellers of residential real property are required to complete a written Seller Disclosure Statement before entering into a purchase agreement. The form covers dozens of property conditions — from the roof and foundation to mechanical systems, environmental concerns, and water-related issues. Sellers must answer each question based on their actual knowledge of the property.

While you are not required to hire inspectors or uncover hidden defects you didn’t know about, you are required to make good faith disclosures. So if you know — or have reason to know — of a condition that could materially affect the value of the property, Michigan law requires you to disclose it. Silence is not a safe harbor.

Buyers who later discover an undisclosed defect can bring claims for misrepresentation and violations of the SDA. Damages can include the cost of repairs, diminution in property value, and in some rare cases, attorney fees. Litigation over disclosure failures is one of the most common real estate disputes we handle in West Michigan.

“No” vs. “Unknown” — A Distinction That Can Make or Break Your Defense

One of the most consequential decisions a seller makes on the disclosure form is whether to answer a question “No” or “Unknown.” Many sellers treat these as interchangeable. They are not.

Answering “No” is an affirmative representation — you are telling the buyer that, to your knowledge, the condition does not exist. If it turns out the condition did exist, or if evidence surfaces that you had notice of it, your “No” answer becomes the centerpiece of a misrepresentation claim.

Answering “Unknown” is honest and legally defensible. It tells the buyer: I cannot confirm or deny this condition based on my personal knowledge and experience with the property. It preserves your good-faith defense, puts the buyer on notice to conduct their own due diligence, and does not create a false impression. That said, “Unknown” is not a magic shield. If evidence later surfaces that you did in fact know of the condition — through prior disclosures, repair records, or other documentation — you can still face liability. “Unknown” is the safer answer when you genuinely don’t know, but it can backfire if the evidence shows otherwise — which is why consulting with your real estate professional before completing your disclosure statement is always a wise step.

The practical lesson: before you answer any question on the disclosure form, pause and honestly reflect on what you actually know about that condition. If you genuinely don’t know, say so. “Unknown” is not an admission of a problem. It is an honest acknowledgment of the limits of your knowledge.

Investors and Flippers Face Heightened Risk

If you purchase a property as an investment — to renovate and resell — you face disclosure obligations that many investors don’t fully appreciate until it’s too late.

Here’s the critical issue: your disclosure obligations are not limited to conditions that arose or were discovered during your ownership. If you received a seller disclosure from the person who sold you the property identifying conditions such as water intrusion, structural concerns, or prior repairs, that prior disclosure can be used as evidence that you had notice of those conditions. Whether that notice rises to the level of “knowledge” under the SDA is itself a litigable question of fact — and one that can lead to expensive and time-consuming litigation over exactly what you knew and when you knew it.

Non-occupant investors are at particular risk because they often rely on paperwork rather than lived experience. They may not have personally observed conditions in the home. But if the prior seller’s disclosure identified issues with the roof or foundation, and you answered “No” to those questions on your own disclosure statement without an adequate basis, a jury may not be sympathetic to the explanation that you never saw it yourself. This is why investors who have not occupied the property should rarely, if ever, answer “No” on the disclosure form. When you answer “No” to a condition you simply never personally observed, you are making an affirmative statement to the buyer that the condition does not exist — and if it turns out that it did, that answer can be used against you as evidence of misrepresentation. “Unknown” is almost always the more honest and defensible answer for a non-occupant seller.

The Bottom Line

Whether you are selling the home you’ve lived in for twenty years or flipping your fifth investment property this year, the Seller Disclosure Act applies to you. The form is not a formality. Every answer carries legal weight, and the difference between “No” and “Unknown” can determine whether you spend years in litigation.

Before you list, take the disclosure statement seriously. Review it carefully. If you have questions about how to answer — particularly regarding prior repairs, structural conditions, or conditions you learned about from a prior seller — consult with your real estate professional before you sign. A brief conversation before closing is far less expensive than a lawsuit after. And if you do receive a demand letter, take it seriously and consult with an attorney promptly — early intervention can make all the difference.

Todd Stuart is the Chair of the Litigation Practice Group at SBS Law, with offices serving the West Michigan community. SBS Law handles nearly every type of real estate dispute, including seller disclosure litigation, property damage claims, commercial real estate matters, lease disputes, evictions, construction lien claims, and neighbor disputes. 

This article is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a qualified attorney.