When buyers commit their hard-earned money to purchasing a home, they should do everything possible to ensure they aren’t making a mistake. While they can read the listing and view the house, this doesn’t reveal everything.
The seller’s disclosure is a way for a buyer to ensure the home has no nasty surprises. We will examine what you need to know about a real estate disclosure when buying and selling a home.
What are seller’s disclosures?
A seller’s disclosure is essential to grasp when buying a house. Most states require the seller to provide the buyer with a document that outlines any known undisclosed information about the home. This could include things about the property that the seller might not want the buyer to know.
This real estate disclosure gives more details on the home’s history, allowing the buyer to be more informed in their decision to purchase.
For the seller, this disclosure can ensure they don’t get sued after selling the home, just as long as the disclosure is truthful.
What needs to be included in the seller’s disclosure?
The exact requirements of the disclosure vary depending on the state. Typically, however, you will likely have to fill out a standard seller disclosure form indicating the required disclosures. Your real estate agent should be able to provide you with this form, and it could include the following:
- Issues that should be disclosed
- A list of questions the seller has to answer
- Sections to provide more information about issues, and unlisted disclosures
- A section to list appliances included in the sale
Any disclosures only have to be things known about the home. There isn’t a requirement to hire a home inspector to find all the possible problems in the property. Types of disclosure could include:
- Repair history. A list of significant repairs to the home.
- Potential hazards and faulty systems. Asbestos, pest infestations, and malfunctioning systems usually need to be disclosed.
- A death in the home. Some states require a recent death to be disclosed to the buyer, mainly if this was a violent death.
- If another party has a lien on the property, this has to be disclosed.
- If the homeowner must follow the rules set by an HOA, this has to be mentioned.
- Property line disputes. If a neighbor disputes the property’s boundary, this could be a problem for a new owner.
- When the current owner has suffered from some annoyances from neighbors, this information needs to be provided.
Why are certain disclosures required?
The necessary disclosures are dependent on applicable laws. Federal, state, and local laws define what needs to be included in the seller’s disclosure.
Often what is required depends on things considered material facts about the home. Material facts are things that are expected to influence the buyer’s decision over whether to buy the home.
Caveat emptor rules
Some states use caveat emptor instead of requiring a seller to complete a disclosure form. Caveat emptor holds the buyer responsible for making the necessary checks before they buy the home.
This should mean the buyer is more careful with due diligence, paying more attention to inspection reports, and working with an experienced Realtor.
For example, a seller will unlikely need to disclose sex offenders in most states. Megan’s law, however, makes it necessary for a sex offender to register.
Are there any consequences if you fail to disclose something?
If something isn’t disclosed that the seller knew, the consequences could be serious. The buyer could begin legal action if they suspect an issue should have been disclosed. If this happens before the closing date, the buyer can cancel their purchase, possibly leading to a fee being paid by the seller.
What buyers need to check in a disclosure document
When you receive a disclosure statement from the seller, you can go through it with your real estate agent or attorney. They will more readily see any possible problems in the disclosure and explain things you might be unsure about.
Some things in the disclosure can be checked against official documents. Permits, liens, and zoning can be cross-checked at local government offices to show if the seller is being truthful.
Where the seller has made claims about repairs and replacements, this should be supported with receipts or contracts.
You should hire a home inspector to check the property. If the seller has disclosed an issue, the inspector can take a look to help you decide if you still want to buy the home.
Final thoughts
The seller’s disclosure gives the buyer a better understanding of the home’s condition and helps them decide if they still want to purchase. Home maintenance can be very expensive, so it’s better to find out as much as possible about potential problems before deciding to buy.
