What is a seller disclosure?
When you have found the home you think you want to purchase, you ask the seller for a seller’s disclosure. This report from the seller will disclose any physical problems or defects the seller is aware of. Though it may be uncomfortable for a seller to disclose issues with their home, it is important to be honest before the home goes under contract as a lawsuit can ensue if it is found that the seller withheld information.
After requesting the seller’s disclosure keep in mind that any large problems can potentially be a negotiating tool when determining the final price of the house, or the house may already be priced at a lower price point to accommodate for the problems or issues disclosed.
A typical seller disclosure is many pages long and will document any known issues with electrical, sewer, heating, water, foundation, roofing and mold, just to name a few.
*Note that a seller is not responsible for disclosing issues they are not aware of.
How to Disclose
Federal disclosure rules include disclosing if your home is subject to lead paint. A seller must disclose if their home was built before 1978, which was when lead paint was used. If the home was built before 1978 your home will need to be checked and a disclosure form will need to be completed.
In some areas seller’s must disclose the following:
- If the home is in a flood zone
- If the area the home is in is prone to earthquakes
- Potential zoning changes
- Pollution issues
It is also important to disclose if you have had mold, termite, roofing or foundation issues in the past. Though fear of scaring buyers off with this information, it is better to be upfront with your potential buyers about these issues so in the long-run you don’t end up in a lawsuit..
Failing to Disclose
Disclosure is crucial. In minor cases, not divulging information about a residence may simply lead to a home buyer incurring certain repair costs. In more serious cases, it may cause bodily injury. For example, there was a case where a heating system malfunction led to the death of the new home owners and to the seller being convicted of involuntary manslaughter. Sellers may assume that disclosing certain facts impacts the ability to sell or the selling price, but neglecting to disclose may have much more severe consequences. Also, as mentioned above, a lawsuit could ensue if a seller is found to have withheld information from the buyer’s.