A seller’s disclosure plays a vital role in fostering transparency during a real estate transaction, benefiting both buyers and sellers alike. This crucial document entails providing written information regarding any known issues that could potentially impact the value of the property, such as termite damage, inadequate drainage, or a leaky roof. Additionally, it includes important details like homeowners association fees and restrictions.

By providing proper disclosure, sellers offer buyers a more comprehensive understanding of the property they are considering. Simultaneously, sellers mitigate the risk of potential legal action by ensuring they do not withhold any pertinent information from the new owner.

Transparency is key in real estate transactions, and a comprehensive seller’s disclosure facilitates honesty and trust between all parties involved.

What exactly is a seller’s disclosure form?

A seller’s disclosure form is a document that sellers typically fill out and sign. It is also known as a notice or statement and consists of yes or no questions about the property, along with space for explanations.

In certain states, you may encounter two versions of a disclosure form. For instance, in Texas, both the Texas Real Estate Commission and the Texas Realtors association have notices that comply with state law. However, the association’s notice requests additional information, promoting even greater transparency.

Competent real estate agents are well-versed in the legal requirements for disclosure. If you’re the seller, your listing agent will provide you with the necessary documents to complete. If you’re the buyer, your agent can guide you through the process of reviewing the completed forms.

It’s important to note that a seller’s disclosure does not replace a home inspection, although it can draw attention to issues that buyers may want inspectors to examine more closely. Generally, disclosures only require sellers to disclose defects of which they are aware. Hidden problems may still exist in the home, even if the seller is honest in their disclosure.

The purchase offer should include a deadline for the seller to provide disclosures and specify the number of days the buyer has to review them. Additionally, the offer should outline the buyer’s right to revise the offer or withdraw from the deal based on the information disclosed.

Federal requirement for seller’s disclosure

Federal law mandates that sellers of homes constructed before 1978 must disclose the potential exposure to lead from lead-based paint, which was federally prohibited for consumer use that year. This exposure can pose a risk of lead poisoning, particularly for young children, leading to lasting neurological damage. To facilitate compliance, the U.S. Environmental Protection Agency offers a lead-based paint disclosure form on its official website.

Additionally, sellers of pre-1978 homes are required to furnish buyers with an EPA pamphlet titled “Protect Your Family From Lead In Your Home,” grant buyers a 10-day window to conduct a paint inspection or risk assessment for lead-based paint, and include a “lead warning statement” within the contract.

Seller’s disclosure laws vary by state

Seller’s disclosure requirements vary among states. Here are some examples:

  • In Maryland, sellers must complete a disclosure form or specify selling the property “as is.”
  • California mandates buyers to fill out the Real Estate Transfer Disclosure Statement and the Natural Hazards Disclosure, which identifies if the property is in a zone prone to natural hazards like earthquakes or wildfires. Additional disclosure may be necessary for the neighborhood or community, depending on local regulations.
  • In New York, sellers must provide a property condition disclosure statement or offer a $500 credit at closing. While some sellers may choose to forego the form and pay the credit, they can still be held liable for failure to disclose defects after the sale.

Several states, including Alabama, Arkansas, and West Virginia, operate under the principle of “caveat emptor,” which essentially translates to “let the buyer beware.” In these states, sellers are typically not obligated to complete a disclosure form, apart from adhering to federal disclosure requirements.

However, it is important to note that there are exceptions even in “buyer beware” states. Therefore, it is crucial to consult with your agent or a real estate attorney regarding disclosure matters. Additionally, sellers have the option to provide a disclosure statement, even if it is not mandated by the state.

What is typically included in a seller’s disclosure?

Seller’s disclosure requirements can vary by state, but they typically cover important issues regarding the property. Some common topics addressed in standard disclosure forms include:

  • Roof leaks or defects
  • Water leaks or previous flooding in the basement
  • Cracks or other defects in the foundation
  • Problems with plumbing, heating, and air conditioning systems
  • Defects in walls, windows, doors, or floors
  • Issues with septic or sewer systems
  • Infestation or damage caused by wood-destroying insects
  • Boundary disputes
  • Unsafe conditions related to radon, asbestos, or lead
  • Homeowners association fees or restrictions

These disclosures aim to provide buyers with comprehensive information about the property’s condition.