Buying a Home: 8 Disclosures Sellers Must Make
When an owner sells a property, they are typically required to disclose information to the realtor and the potential buyers. The requirements vary based on state and local laws, but failing to meet them can lead to legal trouble. Sellers should be aware of what disclosures are necessary to avoid any issues.
In general, a disclosure document is meant to provide details about a property's condition that might negatively affect its value. Sellers who intentionally withhold information can be sued and may face criminal charges. It is a common misconception that selling a property "As Is" exempts sellers from disclosure obligations.
Disclosure rules can impact anyone selling a home, but they particularly affect property flippers, who buy and renovate properties for quick sales. These individuals often deal with homes in subpar condition.
Key Takeaways
- Property sellers are usually obligated by law to disclose negative information about a property.
- Disclosing issues with your home is wise, irrespective of legal obligations.
- Sellers must comply with local, state, and federal disclosure laws.
- Selling a home "As Is" may expedite the process but doesn't exempt you from disclosures.
- Verify your local planning department for specific disclosure requirements.
Local Disclosure Laws
State and local laws have different provisions regarding disclosures. It's essential for sellers to investigate the requirements pertinent to their location.
Moreover, some local laws might have loopholes. For example, in New York, specific issues must be disclosed unless a seller opts to offer a $500 credit at closing. Depending on the situation, some may find it preferable to pay the credit instead of disclosing potentially sale-derailing problems.
Buyers should also familiarize themselves with local disclosure laws and any loopholes to understand what is essential to them before making an offer.
Disclosure laws can be obtained from local and state real estate planning departments or through consultation with a real estate attorney. Being aware of disclosure requirements allows buyers to make informed decisions and shields sellers from potential lawsuits.
Here are eight vital seller disclosures that everyone should be aware of during a real estate transaction.
1. Death in the Home
Many buyers may have reservations about purchasing a home where a death occurred. Disclosure of such events may be necessary. "The requirements differ slightly across states," according to Jim Olenbush, a Texas real estate broker. "For instance, Texas law exempts reporting deaths from natural causes, suicides, or unrelated accidents."
Sellers must disclose fatalities associated with the property itself or violent crimes. For example, if a child drowned in a pool lacking safety features, the seller must inform potential buyers, even if the issue has been remedied.
In states where disclosure isn't mandated, it can still be prudent for sellers to inform prospective buyers about past deaths on the property. "It’s advisable for sellers to disclose everything upfront to mitigate liability concerns," Olenbush added. Surprises from neighbors could lead buyers to reconsider their purchase.
2. Neighborhood Nuisances
Nuisances may include persistent noise or unpleasant odors originating outside the property.
States like North Carolina require sellers to disclose external disturbances that may affect occupants. Michigan law obligates the disclosure of nearby nuisances such as landfills or shooting ranges.
Because disclosure laws vary greatly, it’s crucial for sellers to be aware of what is legally required in their respective states.
3. Hazards
If a home poses a risk of damage due to natural disasters or known environmental hazards, sellers must disclose this information to prospective buyers.
Certain states require sellers to notify buyers of hazardous materials, such as asbestos or toxic waste, and past use of the property for illegal activities.
- Properties located in flood zones or wetlands
- Previous landfills
- Presence of lead and past hazardous spills
4. Homeowners' Association Information
If a property falls under HOA regulations, this should be disclosed. These associations usually charge monthly fees and enforce rules that may not be favorable for prospective buyers.
"A buyer friend of mine faced a significant issue when the seller didn’t provide the last 12 months of HOA meeting notes," shared Ed Kaminsky, a relocation expert. "This led to an unexpected $30,000 expense later on."
5. Repairs
Sellers should disclose any repairs done to the home and the reasoning behind them. Buyers benefit from understanding the repair history as it helps inspectors identify potential issues.
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For instance, Texas law mandates the disclosure of any significant structural or roof repairs, subsidence, or other issues affecting the home's integrity.
6. Water Damage
Water intrusion can lead to extensive damage and growth of mold. Sellers are required to report any history of leaks or water damage.
States like Michigan demand sellers disclose any significant signs of water damage, including basement leaks and issues with the plumbing system.
"Many issues may not be visible during a winter tour," Bill Price, a business lawyer observed, "Therefore, sellers must provide protection under state laws for undisclosed information that may be unknown."
7. Missing Items
Buyers may discover items they assumed would be included but are missing when they move in—light fixtures, appliances, or window treatments.
Some states, including Texas and Michigan, require sellers to provide a detailed list of what's included with the property.
8. Other Possible Disclosures
Buyers should know if a property is in a historic district, as it affects repair and modification permissions.
States like Texas require disclosures regarding pest infestations and any ongoing issues with drainage or zoning. Check state laws for potential additional disclosures.
How to Disclose
Some states mandate specific disclosure forms, while others provide recommendations through real estate associations. Make sure to consult and seek legal advice regarding the disclosure wording.
All disclosures should be made in writing and signed by both parties to enforce accountability.
What Is a Seller's Disclosure?
A seller's disclosure is a real estate document detailing a property's condition and how it may negatively affect value. Legal requirements vary by location.
Do I Have to Tell Potential Buyers About Problems?
It varies among states and depends on the nature of the issue, such as health hazards. Sellers are legally bound to disclose lead paint information, while minor annoyances might not need to be disclosed.
What Happens if I Lie on a Seller's Disclosure?
Providing false information can lead to fines, lawsuits, or both since it creates significant risks for the buyer.
The Bottom Line
Sellers may want to disclose any information about the property to maintain transparency, avoid legal issues, and protect their reputation. Consulting a real estate attorney may help sellers manage their disclosures effectively.