What is meant by disclosure for sellers?

When selling real estate it is important to understand your legal responsibilities as a seller and one of those obligations are honest disclosures.

What is meant by disclosure to seller?

In real estate disclosure refers to the seller legal obligation to disclose known defects about the house or property they are selling.

An asset disclosure statement is the actual document of a seller disclosure. It is an essential form in real estate transactions and underlines any problems with a property that will affect the value or security of the home.

1. They vary by state 

There are only a few federally mandated disclosures but overall disclosure requirements fall under state law and the requirements vary by state. If you are working with an experienced real estate agent they should be well versed with your state disclosure laws.

2. They must be in writing 

With all documents related to the sale of your home real estate disclosures must be submitted in writing.

3. Disclosure details are not inspection reports

Disclosure statements are always required but not all sellers conduct pre inspections and not all buyers choose to inspect the home.

4. Check for disclosures is not required 

When you have to disclose all the faults and problems that exist in your home you do not have to search for problems if you do not have any problems present then you do not have to disclose it. Be sure to check the specific wording of the laws in your state.

Real estate disclosure law 

The only law that is applicable in all 50 states is the requirement to disclose the presence of lead paint. Here is what you need to know:

• Homes built before 1978 require lead based paint disclosure based on the 1992 Residential Lead Based Paint Hazard Reduction Act. 

• Sellers or their listing agents should provide the buyer with a pamphlet on the dangers of lead paint. 

• If you know that the house you are selling has lead based paint then your real estate contract should also include warning language.

• If your disclosure statement includes lead paint make sure the disclosure is signed and keep copies for at least three years.

• Sellers should give buyers a 10 day period to test for lead paint.

• Sellers who know that their house has lead paint and fail to disclose that it can be held liable for up to a decade and sue them for triple the cost of damage so always disclose what you know about lead paint in the house.

State law for seller disclosures

On most states books you will find it helpful to disclose laws relating to seller requirements in what they call "material facts" about the house they are selling. But what is considered a physical fact can vary greatly by state. Some states are incredibly strict about the seller disclosures while others have certain rules with the buyer buying too much at their own risk.

Be sure to ask your real estate agent or a lawyer about specific laws for the state where you are selling.

Some strict issues for seller disclosure in number of states are:-

• A standard disclosure statement that includes anything related to the condition of the property such as HVAC, gutters, appliances, windows, sump pumps, garage doors and more.

• Environmental hazards such as asbestos or gas leaks.

• Walls, fences or driveways that are shared with other property owners as well as information about the property.

• Renovations made without permits or renewals that are not up to code.

• Neighborhood noise and fuss.

• A natural hazard disclosure statement for things like earthquake faults, drainage issues or past floods.

• Property tax disclosure.

• Military base within a mile.

When can a seller property disclosure be dropped?

The asset disclosure process is left only in rare cases. Here are some examples but again be sure to check your own state laws:

• Bankruptcies and property sales

• Bank Owned Homes and Foreclosures

• Gift giving or transfer of property usually between relatives

• Divorce transfer between spouses

How to find real estate disclosure form 

Your state real estate association or board may often have documents in the form of checklists which list the required disclosures in your state. If you are using an agent for transactions, you will have a form to complete and sign them. If you are working on your own you will need to find a form online or create it from scratch.

Common seller disclosed

While all types of issues need to be disclosed when selling a home here are some of the most common items not to report lead paint. These general disclosures all relate to "real property" the actual physical structure and the legal term for the land.

Health and safety hazards: Wound issues can also be considered a health and safety issue. 

Mechanical issues: HVAC condition or age, water, sewer and equipment.

Structural defects: Issues with the foundation or roof.

Flood: Due to previous water damage either environmental or plumbing issues.

Renovation: The work you have done at home must be disclosed whether it is permitted or not. If you cannot decide if a remodeling project feels big enough to be revealed then it is always best in favor of disclosing. 

Pests: Termites and rodents, among others.

Legal Issues: You should also report against property or bankruptcy proceedings that may affect the sale.

For sale to owner disclosures

Disclosure is always required based on the laws of your state whether you are using a real estate agent or selling your home. However you may find loopholes within state laws where agents are responsible for disclosing more information than a sale to owner (FSBO) seller. If you are doing an FSBO listing then the onus lies on you to research and follow through the disclosures.

When to provide buyers with a home disclosure?

It may be appropriate to provide disclosures when there are two times during the listing and sales process.

1. Before Listing Your Home For Sale 

By providing disclosure before a buyer (in your listing details) you benefit from knowing that any buyer who decides to make an offer is ready to proceed with knowledge of the defects. Unless something more prominent is shown in the inspection the buyer does not have much room for negotiation as their original offer must reflect repair costs.

2. After accepting the offer

Depending on state law you usually have a set period of time to disclose to the buyer because you have accepted their offer this is often between three and five days. This usually runs concurrent to the inspection period which helps the buyer inspector know what to look for. Depending on the disclosure buyers can get their earnest money back during this period.

Consequences of failing to disclose

Disclosure laws are designed to protect buyers from purchasing homes with serious flaws and to protect sellers from future legal effects. Therefore, it is important that vendors take disclosures seriously. If you try to hide a defect in your home and get caught, you can sue the buyer, which may include:

Had to pay for the loss: For example if there was a health hazard you may need to pay medical bills. 

Paying for repairs: Even after closing you may have to return and pay for repairs on property related to known defects.

Tips to avoid disclosure disputes

Reveal everything even if it seems minor. Share anything that may negatively affect the utility, value, or enjoyment of the property.

If you have fixed something provide the buyer with a receipt to provide documentation on how the problem was resolved.

Talk to a lawyer or real estate agent about avoiding negative consequences in the disclosure process. 

Do a pre inspection before listing. You will then know what issues are likely to arise and you can repair them ahead of time. Note that if you do a pre inspection you may discover additional issues that you must disclose to the buyer.

Reducing disclosure issues

Not only will they give you the correct look according to state law but they can also answer all your questions about what to disclose and when.

If the process of disclosure inspection and negotiation seems stressful and complicated consider selling your home through a SuGanta Realty Services llp offer. You still have to complete the disclosure but you are selling SuGanta.com for cash so the process is streamlined and simplified.

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