Real estate disclosures are confusing for both buyers and sellers. Our rule of thumb? Be as open and honest as possible. In our latest post, we will cover what you need to disclose by law.
Being an open and honest seller will not only help you avoid a lawsuit, but it will also make you a trustworthy, stand-up, all-around person. Trying to hide defects, known repairs, or other issues will come back to bite you. Whether through a lawsuit or good ol’ karma… if you believe in that sort of thing.
Most real estate lawsuits occur because of non-disclosure.
So what are you legally required to disclose? Basically, anything that can affect the value of the property. Here are just a few of the things you should address:
- Issues with the land, such as drainage, bad soil, and potential for flooding. Bad soil can limit building and low-lying areas can be prone to flooding and water damage.
- Foundation level and known cracks must be disclosed. If the house settles more than it already has, it could experience structural damage.
- Plumbing problems, sewer issues, and leaky pipes all need to be brought to the forefront. Some of the most expensive home repairs stem from water damage.
- Any problems or irregularities with the heating and cooling systems should be addressed.
- If you have a problem with cockroaches, rats, ants, termites or moles, you will need to inform your potential buyer.
- Have a leaky roof or missing shingles? Tell your buyer before they find out during a rainstorm.
- Lead paint is a no-brainer. This disclosure is one of the most common you will see with home sales and rentals.
- Are there issues that will affect the title? Or rightful ownership? This needs to be spelled out up front, not during the closing process.
- You should also have documentation for repairs and insurance claims you’ve made in the past. You should be able to describe what was done and the materials used.
In some states, you’re also required to disclose flood zone, earthquake zone status, and even violent crimes committed in the house. Just think about what you would want to know if you were buying a home for yourself!
Disclosures help a buyer learn as much as possible about a house before making their purchase.
You are selling a great home right? When you keep something to yourself, a minor, needed repair can snowball in much bigger problems. Almost every property has things pop up on the inspection that catch a seller of guard. It is the inspector’s job to be very critical and catch all of the defects both large and small. You don’t want your offer to get reduced in the last minute due to known defects that weren’t disclosed.
In fact, you may even choose to have your home inspected professionally before you try to sell the property. Then you can make any repairs needed and come to the negotiations with a very strong position. An inspection will also show good-faith in selling. You are telling the world you want your home to be in the greatest possible condition before it is sold.
Becuase the disclosures vary from state to state, your agent, attorney or broker will be able to supply you a checklist that covers the requirements for your state. Review the list in its entirety and add as many detailed notes as possible. Make sure to note any upgrades that have been made! Fill out the form as honestly and as completely as possible. If you have questions, it is best to talk to a lawyer instead of your agent. An agent may want to avoid liability and thus avoid certain questions which will make their job more difficult.
Remember, YOU CAN GET SUED for being dishonest.
And if you are found liable, you will need to pay for repairs, legal expenses, punitive damages and in some cases, the sale can be rescinded. This is why it is so important to work with a trusted professional for your disclosures.