What Home Sellers Need to Know about Property Disclosure
Seller disclosure is a tricky maze to navigate. If you’ve recently decided to put your home on the market, you might feel hesitant to reveal even minor problems, which could discourage potential buyers. However, not revealing them could get you in a world of legal trouble.
Rules of seller disclosure
There are no concrete answers as disclosure laws vary by state—and even by city. Be sure to do your research on local regulations, and check with your Realtor® and/or real estate attorney.
Sellers should disclose any known facts about the physical condition of the property, existence of dangerous materials or conditions, lawsuits or pending matters that may affect the value of the property, and any other relevant factors.
How can you possibly know what might influence a buyer’s decision? Is it necessary to disclose a small leak or the potential for flooding? The answer is that failing to disclose these issues could lead to a lawsuit down the line.
“Most sellers think it is in their best interest to disclose as little as possible,” says Rick Davis, a Kansas real estate attorney. “In the vast majority of cases, disclosing the additional information (especially if it is something that was previously repaired), will not cause a buyer to back out or ask for a price reduction.”
To cover all bases, be sure to disclose issues that have recently been repaired, Davis says. If the buyer later discovers that a repair job was botched, you could be on the hook for additional repairs.
Always disclose inspection reports
In most places, you don’t have to provide copies of inspection reports, but doing so can save you trouble. All sellers have a duty to disclose any “material defects.” While buyers and sellers may disagree on what a material defect is, one of the best ways to avoid a legal battle is to give the buyer all copies of past inspection reports —no matter how old they are. This way, buyers can’t say they weren’t informed of a problem.
“Sellers should disclose anything and everything they can think of,” says Adam Buck, certified real estate specialist with the Frutkin Law Firm in Arizona.
What you don’t know won’t hurt you
Although the threat of a lawsuit can be scary, courts won’t hold you accountable for failing to disclose issues you’re unaware of.
Let’s say your house is infested with termites. But you’ve never seen one, or they were missed by an inspection. You can’t be held responsible for not disclosing this defect if it’s discovered by the buyer a few months after closing.
If you don’t know, don’t guess
Buyers can ask for a lot of information about a home, including things you’ve never even thought about.
One common problem area in disclosure? Measurements of the home.
Even if you’ve had an appraiser check out your home, you may have no idea how many square feet it is because, as it turns out, there’s no defined way to measure a home- in fact, different appraisers can come up with different measurements.
In a situation like that, it can be tempting to just guess or come up with an average. Resist the temptation, otherwise, the buyers can come back later and say you lied or misled them about a material issue. If you really don’t know the answer to a question the buyers are asking, just say you don’t know—and put it on them to find out the answer.