Seller Disclosure Statements
The days of buyer beware are gone forever. In fact, given the flood of federal, state, and local consumer protection laws enacted over the last couple of decades, this is the era of 'let seller beware.' As a seller, you may think that some of the disclosure requirements are overly protective of buyers. Because, however, you probably intend to purchase a new home to replace the one you're selling, you can benefit from disclosures as a buyer. All things considered, it's a fair trade.
What information should you disclose?
Disclosure statements differ widely from state to state and from one area to another within any given state. Generally speaking, the law requires that you disclose to prospective buyers any information you have that materially affects your property's value or desirability. This disclosure must cover facts that you, as an owner, are expected to know about your property and the neighborhood that couldn't be known by (or wouldn't be apparent to) the buyer. For example:
- Physical condition: Are your built-in appliances in good working order? Do you know about any hidden defects or malfunctions in your house's major components (roof, foundation, electrical system, plumbing, sewer, insulation, windows, doors, walls, and so on)? No one expects you to be a professional property inspector, and disclosure laws are one reason why getting a premarketing inspection of your house is wise. You and your agent should also encourage buyers to conduct their own investigations and obtain inspections from their own experts instead of relying solely on your inspections or the information you provide about the property's physical condition.
- Health, safety, and environmental hazards: You must comply with federal, state, and local disclosure laws regarding property problems related to asbestos, formaldehyde, lead-based paints, underground fuel or chemical storage tanks, radon gas, and other health hazards. Is your property in harm's way from earthquakes, floods, hurricanes, or other natural disasters? Does your property comply with local energy or water conservation ordinances?
- Legal condition: Are any lawsuits pending that affect your property? Did you make any modifications or alterations to your property without getting the necessary building permits? Do these modifications or alterations comply with state and local building codes? If you're selling a condominium, you must give the buyer copies of the Covenants, Conditions, and Restrictions (CC&Rs), the Homeowners Association bylaws, and the budget.
- Subjective areas: Subjective questions can't be answered with a simple yes or no. The environment that you think is extremely quiet, the buyer may consider a boiler factory. Answer all subjective questions to the best of your ability, and then encourage buyers to familiarize themselves with the area so they can draw their own subjective conclusions about these issues.If you're not sure whether or not you have to make this type of disclosure about your property, consult your listing agent or a real estate lawyer.