Maria is selling her four-unit residential building in West Valley City, Utah. She has owned the property for twelve years and is aware that unit three has a recurring foundation crack that has been patched twice but continues to reappear. She discloses this on the Seller's Property Condition Disclosure form. The buyer, Tom, signs the REPC and receives the disclosure form simultaneously. During the due diligence period, Tom's inspector confirms the crack but characterizes it as cosmetic. Tom waives his due diligence condition and proceeds to closing. After closing, an engineer determines the crack is structural and will cost $45,000 to repair. Which statement most accurately describes the legal outcome under Utah law?

Correct Answer

D) Maria may have residual liability if her disclosure understated the known severity of the defect, but not if she disclosed all she actually knew

Under Utah Code Ann. § 57-27, the seller's disclosure obligation is to disclose known material defects honestly and completely. If Maria disclosed the recurring crack accurately and completely — including its history of reappearing after patching — she has fulfilled her statutory duty. However, if her disclosure minimized or omitted material details about the defect's severity or history that she actually knew, she could retain liability. The key is whether her disclosure was accurate and complete relative to her actual knowledge. Tom's waiver of due diligence shifts risk for undiscovered defects to him, but it does not shield the seller from liability for inadequate disclosure of known defects.