When you are buying a house, you need to be aware of any potential issues with the property. The seller has an obligation to disclose any issues they are aware of. Proper disclosure means the buyer gets a more comprehensive view of the property, and the seller lessens their chance of getting sued by the new owner for hiding information.

A seller’s disclosure is a document that sellers are legally required to provide buyers. This piece of paperwork will include all the undisclosed details related to the property that negatively affect its value.

Familiarizing yourself with the seller’s disclosure form will benefit all parties—buyer and seller alike.

What is a Seller’s Disclosure?

A seller’s disclosure statement form is a standard checklist form containing material defects and features of the property. It provides information about the property that may negatively affect the value of the house.

If there are material defects in a property that may impact the value of the property AND the seller is aware of them, the seller should disclose them. However, sellers should report these defects to the best of their knowledge and in good faith. From pest infestation to pending legal issues, you should disclose any known information. This will help you avoid future disputes.

Remember, every state has different seller’s disclosure laws. So, it is advisable to review the form with your real estate agent or lawyer as per the statutes in your state. Usually, the disclosure form is completed along with the listing paperwork – especially in the Multiple Listing Service (MLS) provided by the listing agent.

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 Do Not Require Investigation

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

Why is a Seller’s Disclosure Important?

A seller’s disclosure protects the buyer by informing them of any issues or defects the home and surrounding property may have. It also safeguards the seller from being sued by the buyer after the transaction if the seller’s disclosure was completed correctly.

For buyers

The goal of the seller’s disclosure is to inform the buyer of the property’s history so buyers can make an informed decision. If the seller’s disclosure reveals a major issue with the home, buyers can back out of the deal without losing earnest money. Any problems documented in the seller’s disclosure can also give the buyer some negotiating power, such as the price of the home or requesting the seller make any necessary repairs.

For sellers

The seller’s disclosure can only protect the seller if done accurately and honestly. If done correctly, this document will protect the seller from being held legally liable for any issues that may develop with the home in the future. This is only the case if the seller made the buyer fully aware of all home defects before the completed purchase. The seller only needs to disclose what is required by their state.

What Should a Seller’s Disclosure Include?

A seller’s property disclosure should include a full list of issues. The exact issues that need to be listed vary from state to state, so make sure to find out your state’s requirements. Some general problems with seller’s disclosures issues across the country include:

  • HVAC
  • Mold
  • Pest infestations
  • Water damage
  • Leaks
  • Foundational integrity issues
  • Lead paint
  • Asbestos
  • Additions and improvement projects (without a permit)
  • Any major repairs made by the seller or previous owners
  • Insurance claims made

When Do You Receive the Seller’s Disclosure?

In many cases, you will get the seller’s disclosure form before you make an offer on the property. The form will be ready for all prospective buyers. But in some states, the seller must provide the disclosure a certain number of days after your offer is accepted or a certain number of days before closing.

Review the seller’s disclosure notice carefully and talk it over with your real estate agent. Before you move forward, you will need to sign the property disclosure statement acknowledging that you received it.

Can the Buyer Walk Away After Receiving the Seller’s Disclosure?

In many cases, yes — but state law may have a say. You generally have a chance to back out of the sale within a certain number of days after receiving the seller disclosure statement. Also, if you don’t get a seller’s disclosure and the sale doesn’t fall under one of your state’s exemptions, you may be able to cancel the purchase without penalty.

What if the Seller Lies?

If your seller lied on the property disclosure statement, and you have already closed, you need to be ready to prove that information was intentionally withheld in a court of law. The buyer can sue for damages sustained due to omitted information bear in mind that there is a statute of limitations. If too much time has elapsed, you no longer have a case, although you may still be able to sue for fraud.

As a seller, keep in mind that you can be held liable for damages and repair costs if you are caught lying on the seller’s closing disclosure.

Check your state’s guidelines and stay informed. Familiarize yourself with the laws and requirements and do your best to purchase from a reputable seller.

Get a Home Inspection Even With a Seller’s Disclosure

In addition to the seller’s disclosures, the buyer should always have an inspection done. No matter how thorough or trustworthy the seller may be, a seller’s disclosure is no substitute for a thorough home inspection by a licensed and qualified professional. Most buyers are not trained to look for and identify the issues that can affect the average home. Before you buy, it is in your best interest to get an inspection.

Find the Right Agent

Windermere’s community of real estate professionals is our greatest asset. We have experts in all areas of real estate, from your typical starter home to condos, luxury properties, and new construction. While residential real estate is the mainstay of our business, Windermere also has offices and associates who specialize in property management, commercial real estate, and relocation services. To further facilitate the home buying process, Windermere has affiliated partners in certain regions to provide mortgage, title, and escrow services.

Call us today with any questions or concerns. Our professional Real Estate Agents will help you through this exciting process. (951) 369-8002