Patricia listed her Rapid City home with broker Mark. After accepting an offer from buyer Greg, Patricia discovers a previously unknown foundation crack during her own pre-move-out cleaning. The crack was not present — or at least not visible — when she completed the seller disclosure statement two months earlier. Mark advises Patricia that because the disclosure was already signed and delivered, she has no further obligation. Under South Dakota law, which statement most accurately describes the parties' obligations at this point?

Correct Answer

B) Patricia must amend the disclosure statement to reflect the newly discovered defect, and Greg may have the right to rescind the contract upon receiving the amended disclosure.

Under the South Dakota Residential Seller Disclosure Act (SDCL 43-4-37 through 43-4-44), if the seller discovers a material defect after the disclosure statement has been delivered but before closing, the seller is obligated to amend the disclosure statement to reflect the newly discovered condition. A foundation crack is a material defect that a reasonable buyer would consider significant. Upon receiving an amended disclosure, the buyer (Greg) may have the right to rescind the purchase agreement within a specified period, as the amended disclosure constitutes a material change in the condition of the property that was the basis of the original contract.