Purchasing a home is a significant investment, so buyers want to make sure they know as much about the property as possible. The home listing and walk-through give some information about a house’s condition. Seller disclosures complete the story.
While seller disclosure requirements vary by state, they generally include specific issues with the home, questions about the property, and the appliances included in the sale. Most states have a standard real estate disclosure form to make the process easier.
It may sound tedious, but seller disclosures in real estate are a critical part of the home-selling process. More importantly, they can protect sellers from legal action should an issue come up after the sale.
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What is a seller disclosure in real estate?
Seller disclosures in real estate detail known issues with the property’s condition that could negatively affect its value. They give buyers a deeper look at problems or concerns that might be missed in a regular walk-through.
A seller disclosure is a questionnaire-type form that asks sellers to check off specific issues the home has and notes the appliances included with the sale. It lists questions about the property for the seller to answer with “Yes,” “No,” or “Unknown.” There’s also space to explain the issue further, state whether it was fixed, and provide additional disclosures that aren’t listed.
Buyers typically receive a seller disclosure after they make an offer on a home. But, in some states, buyers may not see the form until right before they sign a purchase agreement. Buyers can also request a seller disclosure if their state doesn’t require one.
A seller disclosure shouldn’t replace a home inspection.
Common seller disclosure requirements
Even if you aren’t selling a house that needs repairs, seller disclosure requirements still apply. Some disclosures are federally mandated, like the presence of lead paint, while others vary based on state or city laws.
Regardless of where you live, these are the common things sellers must disclose:
- Repair history. Detail all major repairs made to the property and whether anything will require ongoing maintenance. This includes why the repair was needed so buyers can have their home inspectors check the work thoroughly.
- Deaths or crimes. Some states require more details than others, but it’s generally wise to alert buyers to any deaths or crimes that occurred in the home. Even if it’s not legally required, agents must disclose a death if the buyer asks.
- Hazards and damages. Disclose issues that could affect the foundation, such as water damage or cracks. Also list matters that could endanger the buyer or the home’s integrity, such as termite damage, asbestos, radon, lead paint, or faulty home systems (e.g., plumbing and electrical).
- Area nuisances. This typically includes noises, odors, and other nearby occurrences that may affect the buyer's living conditions. Common examples are farms, airports, military bases, landfills, industrial complexes, and shooting ranges.
- Pests. Report the presence of any pests like termites that could lead to structural damage. Also, disclose a history of infestations, where they occurred, and how the area was repaired.
- Appliances. List the appliances, lighting fixtures, furniture, and other large items that come with the home. This will prevent the buyer from making assumptions or being surprised when they move in.
- Neighborhood details. Disclose whether the property is governed by a homeowners association, which often comes with fees and rules to follow. Similarly, homes in a historic district may be limited in repairs or changes to the home’s exterior.
- Liens or other actions against the home. Inform the buyer of any existing liens on the property. Also, disclose actions like boundary disputes or easements, which can limit what the buyer can do with the property or even lower home values.
What determines which seller disclosures are required?
Seller closing disclosure requirements are dictated by federal law, while others are determined by state and city governments. Most listing agents recommend disclosing as much as possible to protect sellers from future legal action.
For homes built before 1978, federal real estate disclosure law requires sellers to:
- Report all known lead-based paint in the house
- Give buyers the “Protect Your Family From Lead in Your Home” pamphlet, prepared by the U.S. Environmental Protection Agency (EPA)
- Include warning language in the contract and have all parties sign statements verifying all requirements were completed
- Keep the signed statements for three years
- Give buyers 10 days to test the home for lead
Your real estate agent can explain the disclosures your state or city requires. Some locations may also exempt properties from certain disclosures, like homes sold as is, foreclosures, sales between family members, or homes sold at public auctions.
What are the disclosure laws in my state?
Your real estate agent is your best resource for understanding the seller disclosure requirements in your state and city. If you’re selling a house without a realtor, consult a local agent or a real estate attorney to learn what you should disclose.
Real estate commissions should also provide information on disclosure requirements in each state. If no laws exist, buyers are responsible for uncovering issues through home inspections. This is the caveat emptor rule, also known as “buyer beware.” Still, sellers should err on the side of caution. When in doubt, disclose it.
What happens if sellers don't disclose something?
Seller disclosures in real estate exist to protect both buyers and sellers in the sale of a house. If the seller knows about an issue but doesn’t disclose it, the buyer could cancel the sale. Sellers could also face a fee for violating local or state laws.
Even worse, a buyer could seek legal action against the seller if the buyer believes the seller knew about a problem but didn’t disclose it. However, sellers can’t be held accountable for new issues that arise after the buyer moves in.
Look at it this way: if you have a recurring squirrel infestation, you should disclose it to avoid legal consequences. But if you’ve never had pest problems before, the new owner will be responsible for removing any squirrels that move in. Remember, houses face constant wear and tear. If you disclose three foundation cracks but a fourth appears after the home sells, it’s not your problem.
Completing the real estate disclosure form accurately is essential, so find a real estate agent to guide you through the process. Be honest about the condition of your home and its features. Check to ensure you mention all material defects — issues that could negatively impact the property’s value or pose safety risks to its residents. Above all, don’t try to hide or lie about any known problems.
FAQ
What is the most common disclosure in real estate?
The most common seller disclosure outlines material defects or issues with the property that could affect its value or harm its residents. It typically covers significant potential problems, such as hazardous substances and major repairs.
Does the buyer have to sign the seller disclosure?
Yes, a buyer signs the seller disclosure to acknowledge that they have received and reviewed it. They typically receive the disclosure after making an offer on the home, although they may not see it until just before signing the purchase agreement.
