Disclosures in a home sale
December 14, 2011
Most states require the homeowner to present buyers with a disclosure of any known problems with the house when selling a home, according to Bankrate.com. Important factors which usually must be disclosed to ensure fairness include physical defects and any legal obstacles to a purchase. How extensive the requirements are varies from state to state, however. Forms might be up to 10 pages long to cover different possibilities, according to the source. Real estate agents can help their clients ensure appropriate disclosures are made and received.
There may also be some exceptions however. Some experts noted disclosure may not be required when the seller has not lived in the home for the past 12 months, or if he or she never lived there at all. In those cases, they may lack personal knowledge of the property. They should generally inform the buyers that there are no disclosures in those instances.
Types of disclosures
Homes for sale are complex enough that many things could be wrong with them. Given the varying age of properties and care owners take of their residences, disclosures can cover critically important issues or minor inconveniences. MainStreet notes they might warn prospective buyers about loud neighbors or notify them the windows are leaky.
Natural hazards may have to be disclosed by the seller in states like California, according to legal resource Nolo.com. That state has fairly extensive requirements and also includes things like leaky roofs and neighborhood nuisances like loud dogs.
Buyers usually must be informed of any past problems with toxic materials such as lead, asbestos, radon and carbon monoxide. These can pose health risks, so buyers are often concerned about them. These substances may be more common problems in older homes, since newer construction is designed to avoid such environmental hazards.
Disclosure laws
In addition to state laws, some counties, cities and local governments may have their own disclosure mandates and regulations. Failing to meet disclosure requirements may result in a lawsuit later, or sour a home sale if it comes out before the deal is closed. Since most home sales involve inspectors and appraisers looking at the property as well as buyers and their agent, the chance of spotting a problem may be high.
Generally, the owners are only liable if they fail to disclose something they knew about. Any problem they were unaware of will not be held against them in most states, so they are not responsible for seeking out flaws. Covering them up or failing to report them, however, could lead to penalties.
In addition to government requirements, MSN Real Estate reports many listing companies will require the home seller to fill out a disclosure form before listing their house.