The Seller's Disclosure

Most states require the seller to provide the purchaser a written residential home disclosure. This disclosure is required in order to inform you, the purchaser, of any material defects in the real estate. It is against the law not to disclose information to a buyer, and you should know to request this information when looking at a property. You will have to sign a receipt as well, usually on a copy of the form, showing that you received the disclosure.

Read the disclosure. Usually you will find one of three things with disclosures. First, you may find that the seller knows of no material defects with the property. Second, you may find that at one time there was a problem, like a leaky roof, and that it was repaired. Or third, there is a problem that requires attention. If you find a defect after closing that was not revealed to you on the seller's disclosure, you have the ability to recover damages as prescribed by statute in many states. Penalties are quite large in some cases. The seller in most cases will have the right to remedy the problem for you.

Disclosures are generally not required when you buy a new home, as it has not been lived in and there should be nothing to disclose. New homes should be inspected by you and your licensed inspector prior to closing, looking for material items and punch-list items (items that the builder is contractually obligated to fix before closing).

Disclosures really apply to resales only. Items may include the following:

  • Indications of whether there has been flooding in the basement of the property through sewer backup or from foundation leakage

  • Roof or skylight leakage

  • Knowledge of environmental problems — asbestos pipe wrap, underground storage tanks, or radon

  • Structural problems

  • Termites or bug infestation

  • Problems with heating, ventilating, and air conditioning

  • You can obtain a disclosure from your state or local real-estate board office or from your real-estate agent. These disclosures will vary from state to state, but are there for your review to inform you of potential problems with the property.

    Some states do not require disclosure when a property is sold as part of an estate or when it is sold by a trustee in cases where the administrative seller has not lived in the property and has no knowledge of any history.

    If you read a disclosure that indicates an existing problem, it may be that the seller does not have the funds to remedy or fix the problem. Read the disclosure carefully, as it may provide a negotiating tool for you if you are capable of attending to an item, and you can reduce the purchase price accordingly.

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