Required Disclosures When Selling U.S. Real Estate

What you must reveal to potential purchasers when selling a house or other piece of real estate.

You should probably mention issues that can lower the property’s value or appeal when selling your house in the US. A severe physical flaw in your property cannot be actively or fraudulently concealed in any state. Beyond this, however, rules in the majority of states mandate that sellers take the initiative to inform buyers of issues by providing written disclosures regarding the condition of the property, typically using a standard form. In-depth examination of common disclosure obligations and recommendations for best compliance are provided in this article.

You will probably only be required to provide facts that you personally know, even in states where the law mandates seller disclosures. In other words, you typically don’t need to hire inspectors to uncover issues you had no idea existed. However, a lot of the problems are ones that sellers would already be aware of if they had lived there, for instance:

if the home has a variety of appliances (refrigerator, dishwasher, air conditioning and/or heating system, security system, hot tub, garbage disposal, and so on), and if so, what kind of roofing material and condition they are in.
Whether the property has been stigmatized in the public eye by dramatic circumstances such as a murder or other violent crime, hauntings or supernatural phenomena, suicide, or other serious criminal activity (more than a simple burglary). Other factors to consider include the history of pest activity, water intrusion or related foundation or grading issues, neighborhood issues like noise or pollution, local environmental hazards, and whether the property has been plagued by pests in the past.
Additionally, rules in some jurisdictions specify certain issues that fall under the seller’s purview to investigate whether or not you see any indications of the issue. In these situations, or when you might have identified a specific flaw but chose to ignore it, you can ultimately find yourself in court and be ordered to reimburse the buyer for the costs associated with your failure to raise the issue sooner.

Particularly Strict Disclosure Requirements in California

Regarding disclosures made by real estate sellers, California is one of the tightest states in the union. Sellers are required to complete and provide the buyers with a disclosure document outlining a variety of flaws, including a leaky roof, deaths that have occurred on the property within the last three years, neighborhood annoyances like a dog that barks at night, and more.

Additionally, California sellers are required to complete a different form that details any potential risks from situations including floods, earthquakes, fires, environmental concerns, and other issues. A natural hazard disclosure statement is what this is known as.

Additionally, vendors in California are required to inform customers that a database of known sex offenders is available and kept up to date by law enforcement.

Take into account hiring a professional inspector

Although it’s not typically necessary, some home sellers employ a property inspector to check things out before they list the house. To get a home inspection, go to that page. The outcomes will aid you in preparing any necessary disclosures and will enable you to identify which goods or home features need repair or replacement. An inspection report can be helpful when determining the value of your home and negotiating with potential purchasers.

Some sellers hesitate because they are aware that after receiving the report, they will have to inform prospective purchasers of what was found and, more than likely, provide them with a copy of the study itself. But bear in mind that the buyer was probably going to get this information anyhow. In fact, buyers frequently include a “inspection contingency” in their purchase offer, with the exception of extremely hot markets, allowing them to hire an inspector separately and cancel the sale if they’re unhappy with the findings (which, in practice, usually just entails negotiating over repairs, price reductions, or credits to do the work).

However, some purchasers might forego the inspection entirely if they believe you employed a reliable inspector.

Does Each and Every Property Issue Require Disclosure?

You have obligations as a house seller, but there are restrictions. Only “material” flaws that would negatively impact the property’s worth must be revealed, according to the majority of state regulations. That excludes normal wear and tear, like a scuffed tile or a squeaky doorknob. It omits insignificant, dehumanizing acts like a prior home invasion. It excludes domestic natural deaths. Latent flaws, such as missing front steps, that are visible to anyone viewing the property may also not need to be revealed.

On the other hand, avoid the risk of responsibility and reveal everything if you have even the slightest doubt about whether or not to disclose something to possible buyers. The buyer’s trust that you’re dealing fairly will be increased by full disclosure of any property flaws. Additionally, it will shield you from future legal issues like buyers who wish to back out of the contract or who allege damages as a result of your negligent or deliberate withholding of facts regarding your property.

Also keep in mind that you are not required to fix or rectify an issue just because you reveal it. Due to their desire to complete the transaction, home purchasers frequently overlook small flaws. Or, you and your buyer may decide to negotiate based on the stated item.

Warnings about lead-based paint

The Residential Lead-Based Paint Hazard Reduction Act of 1992, generally known as Title X, requires compliance if you are selling a home constructed before 1978 (U.S. Code 4852d). You have to

Provide buyers with a Protect Your Family from Lead in Your Home pamphlet created by the U.S. Environmental Protection Agency (EPA), as well as specific warning language in the contract and signed statements from all parties attesting to the completion of all requirements. Keep signed acknowledgements for three years as proof of compliance.

Give buyers a ten-day window to test the home for lead.

The customer may sue you for triple the amount of real damages if you violate Title X regulations. Contact the National Lead Information Center by phone at 800-424-LEAD for more details on lead risks, prevention, and disclosures, or visit its website at www.epa.gov/lead.

How to Locate the Required Real Estate Disclosures in Your Area

For information on the disclosures needed in your state, speak to your real estate agent, attorney, or state department of real estate. The legislation in a few states have also been condensed by Nolo. For information on local laws and disclosures that have an impact on your sale, you should also contact the planning department of your city.

Be aware that disclosure documents are increasingly being requested from sellers by real estate brokers, regardless of whether such forms are legally needed in the state in question.

How Real Estate Sellers Are Required to Make Property Disclosures

A particular document that the seller must sign and date is required by law in the majority of states for disclosures. However, it’s typical for the state Realtors’ association to provide a standard form for this purpose even in states where the laws don’t specifically indicate this.

By signing and dating the paperwork, you may be sure that the house buyer has acknowledged receiving the disclosures. Alternatively, if your state doesn’t mandate a specific disclosure form, make sure the buyer verbally or in writing confirms receipt of your disclosures.

Craig Cherney is a trusted client advisor and a sought after real estate expert witness who is hired by the nation’s top Real Estate Litigation Attorneys to help resolve their litigated real property matters.  Craig has appeared as a testifying expert witness before judges and juries in California, Arizona, Nevada and other jurisdictions across the country. Craig Cherney, Esq. Expert Witness Real Estate. 480-399-2342.