Understanding Seller Disclosures

You may be thinking of selling your house. First, you must understand your legal responsibilities when selling real estate. One of these responsibilities is honest disclosures.

What Is Seller Disclosure?

Disclosures are legal obligations that the seller must disclose any known defects in the property or home they are selling.

A property disclosure statement describes the seller's actual disclosure. It is required in real estate transactions. It outlines any issues with the property that could affect its value or safety. These issues are required by law for sellers to disclose. However, sellers who fully document them on the disclosure statements are better protected against future legal action (e.g., if a buyer were to sue the seller for undisclosed issues).

Seller Disclosure Basics

Here are four important things to know about property disclosure statements.

• They Differ From One State To The Next

  While a few disclosures are federally required, most disclosure requirements are state-specific and vary from one state to the next. Therefore, an experienced real estate agent should be familiar with the state's disclosure laws.

• They Must Be Written

  Real estate disclosures, like all documentation related to the sale or purchase of your home, must be submitted in writing

• Inspection Reports Are Not Made From Disclosure Statements

  Although disclosure statements are required by law, not all sellers conduct a pre-inspection, and not all buyers opt to have a home inspection.

• Disclosures Don't Require Investigation

  You must report all defects or issues in your home. However, you don't have an obligation to search for them. Instead, check the state laws to ensure you understand the details.

Common Seller Disclosures

There are many issues to disclose when selling a house. Here are the most important items to disclose, excluding the federal mandate to report lead paint. These disclosures all relate to "real property," which is the legal term for the physical structure of the land.

• Safety And He3alth Hazards:

  Mold disclosures are common. A foundation issue can also pose a safety and health risk.

• Mechanical Problems:

  Heating, Water, Sewer, and Appliances

• Structural Problems:

  Problems with the roof or foundation

• Flooding:

  Previous water damage due to environmental or plumbing problems

• Renovations:

  All work done to the house must be disclosed. It's best to disclose if you are unsure if the remodeling project is large enough.

• Pests:

  Rodents and termites, among other things

• Legal Issues:

  You must also report any liens against the property or bankruptcy proceedings that may affect the sale.

Less Common Seller Disclosures

Although these disclosures are less common, the state laws may vary. However, they are not as common as "real property" and are often considered to be rare.

• Zoning and property line disputes

• If the property has been the site of a crime, murder, or is believed to be haunted (seriously!)

• Square-footage discrepancies

• Poor neighbors or noise from nearby residents

• If the homeowners association (HOA) is applicable to the property,

• Sex offenders in the immediate vicinity

• Nearby toxic materials like contaminated soil

For-Sale-By-Owner Disclosures

If you are selling your home yourself or using a realty agent, disclosures must always be made. There may be loopholes in state laws that require agents to disclose more information than a seller who is selling their home for sale by the owner. Listings by FSBO are your responsibility. You must research and follow up on disclosures.

How To Find A Real-Estate Disclosure Form

The disclosures required by your state may be listed in documents that are often available in a checklist format. The agent will provide a form if you are using them for the transaction. You may need to search for a form online or make it yourself if you are working alone.

When Should You Disclose Property?

Two times are there when disclosures may be necessary during the selling and listing process: before you list your home or after you accept an offer.

You should disclose your home before listing it for sale. Listing description. This will ensure that you can trust that the buyer who makes an offer will be willing to accept your offer, regardless of knowing about any defects. The buyer will not be able to negotiate if there is nothing more significant than was found during the inspection. Their original offer should have included repair costs.

Accepting The Offer:

Depending on the state law, there is usually a time limit to provide disclosures to the buyer once you have accepted the offer. It can be between three and five business days. This usually occurs concurrently with the inspection period. This helps the buyer's inspector to know what to expect. In addition, the disclosures allow the buyer to withdraw and get their earnest money back.

Federal law provides that buyers have another ten days to test lead-based paint regardless of state contingency periods.

Is It Possible To Omit A Seller's Property Disclosure?

In rare cases, the property disclosure process can be skipped. These are just a few examples. However, you should always check the laws in your state.

• Bankruptcies and estate sale

• Foreclosures and bank-owned homes

• Gifting or transferring property between relatives

• Transfer between spouses during a divorce

• Business transfers are usually made when two or more investors own a rental property

Failure To Disclose Can Have Serious Consequences

Disclosure laws protect buyers from buying homes with serious defects and protect sellers from any future legal consequences. Sellers must be careful about disclosures. The buyer can sue you if you hide a defect in your house and are caught. This could include:

Expenses For Damages:

You could have to pay medical bills if you were exposed to a potential health hazard.

Repairs:

You may still be required to pay for the repairs after closing.

Avoid Disclosure Disputes With These Tips

• Even if it seems small, disclose everything. Anything that could adversely impact the utility, value, or enjoyment of the property should be shared.

• All signed disclosures should be kept for at least three years after closing.

• To document the resolution of an issue, give receipts to the buyer if you have fixed it.

• Discuss the best ways to avoid disclosing information to a real estate agent or attorney.

• Before listing, do a preinspection. This will allow you to identify potential issues and make repairs before they occur. You should note that pre-inspection may uncover additional issues that you will need to share with the buyer.

Minimizing Disclosure Issues

An experienced agent in real estate is a great way to avoid disclosing issues. They will provide the forms required by state law and answer any questions you may have about disclosures.

Real Estate Disclosure Laws

There are laws governing seller disclosure at both the federal and state level. Therefore, it is important to fully understand your obligations before you complete a generic real-estate disclosure.

Federal Real Estate Disclosure Laws

Surprisingly, there are very few federal regulations governing real estate disclosure. Only one law is applicable to all 50 states: the requirement to disclose the presence of lead paint. Here are the facts:

• A lead-based paint disclosure is required for homes built prior to 1978. This disclosure is based on Title X of the Residential Lead-Based Paint Hazard Reduction Act of 1992.

• Buyers should be provided with a leaflet by the seller or their listing agent on the dangers of lead paint.

• You should include warning language in your realty contract if you are aware that the house you're considering selling has lead-based paint.

• If you disclose lead paint, ensure that the disclosures are signed and kept for at least three years.

• Sellers must allow buyers to test for lead paint within a 10-day time frame.

• Sellers who are aware they have lead paint in their homes but fail to disclose this can be held responsible for up to 10 years. They can also be sued for three times the amount of the damages.

State Laws For Seller Disclosures

Most states have laws that require sellers to disclose what they consider "material facts" about the property they are selling. However, the definition of a material fact may vary from one state to another. While some states have very strict rules regarding seller disclosures, others have a loose framework that buyers can buy at their own risk.

Each state is unique, so here are some examples. Ask your agent or attorney about the laws in the state you are selling.

California Is One Of The Most Strict States Regarding Seller Disclosures

California sellers must list a wide range of disclosures that they have made, including:

• A standard disclosure statement that describes the condition of the property. This includes HVAC, gutters, and appliances. Sump pumps. Garage doors.

• Environmental hazards like asbestos or gas leaks

• Shared walls, fences, and driveways with other property owners. Also, information about easements on the property.

• Renovations without permits or that aren't up to code

• Noise and nuisances in the neighborhood

• Natural hazards disclosure statement for past flooding, drainage problems, earthquake faults, and other issues

• Disclosure of property tax

• Within one mile of military bases

• Nearby sex offenders (per Megan's Law).

• Death on the property within three years

Maryland: One State That Requires Seller Disclosures Is The Most Relaxed

Maryland, on the other hand, has very few regulations regarding seller disclosures. Maryland sellers can either give a standard property disclosure statement to the buyer or sell the house with a disclaimer about the condition of their home. This is basically selling the house as-is. This sale places the burden of all issues on the buyer. You must still disclose asbestos, formaldehyde, foundation problems, and faulty water pipes.

Caveat Emptor States

Caveat emptor is a warning to buyers. In Alabama, Arkansas and North Dakota, West Virginia, West Virginia, Wyoming, and Wyoming, there is no legal obligation for the seller to disclose any information about the home's physical condition. However, there are a few exceptions.

• Alabama's law states that buyers should be cautious unless there is a fiduciary relationship between seller and buyer. The seller has knowledge of safety or health risks, or the buyer directly questions something.

• Arkansas law states that buyers should be cautious if the seller is telling a complete lie about the property. To avoid any misrepresentations, buyers should use an agent to investigate the property.

It is also worth noting that real estate agents who are members of professional organizations in caveat-emptor states (or other states) may be subject to higher ethical disclosure standards. This can lead to sellers disclosing issues even though state law does not require it.