Residential Property Disclosures
Property owners in most U.S. states are required to give buyers a written disclosure that describes facts about the structure they are selling. Each state that requires disclosure provides its own forms, so the specific questions sellers must answer differ in every area. Most disclosures do cover many of the same topics, giving the seller the opportunity to answer “yes,” “no,” or “no representation” to questions about all components of the property.
Sellers sometimes answer questions with “unknown” or “no representation” when they are unsure if a problem exists. The property might be part of an estate settlement, and the person handling the sale simply doesn't know the answers. The property might be a vacation home that hasn't been used for some time. It's also possible that the seller is being evasive. Sellers should not declare “no representation” about an item they know is defective, but it does happen.
Some FSBO sellers don't realize that they are required by law to give potential buyers a residential property disclosure. Not following through on that duty in states where it's required can create liability for the seller if a pre-existing problem is discovered after closing.
Even if sellers are not required to give potential buyers a specific disclosure form, local real-estate laws probably do require them to disclose information about any known problems associated with the property.
Ask for a disclosure for all properties you want to look at, then refer to it during showings to remind you of the age of components and known problems associated with them. You might even find that there are properties you don't want to see because disclosed problems are excessive.
One way to learn more about the disclosures required in your area, along with many other facts about real estate, is to take a real-estate agent licensing class. You don't have to become an agent — just taking the class will give you a head start on learning about real-estate laws in your area.
Common Items on Disclosure Forms
A property disclosure contains details about the condition of the property, the age of its components, and any defects that may exist. That type of information is called a
Age of shingles and other roof components
Facts about known leaks in the roof or foundation
Details about past or present mold or mildew within the structure
Information about prior or current infestations of wood-destroying insects
Problems with sewer lines or septic systems
Paid or unpaid fees for upcoming assessments, such as sidewalks
Information related to planned roadways or other events that will affect the property
The existence and location of a buried fuel storage tank
In some states or localities, certain facts might be disclosed on a special form. Your state or city might require specific disclosure if a property is in an airline flight path, within a flood plain, located on a fault line, or affected by other conditions of a local nature.
Chapter 9 includes more information about disclosures and inspections that are related to environmental hazards, such as lead paint, radon, molds and mildew, and asbestos.
What's Not a Material Fact?
Some things you might like to know more about are
Buyers always want to know the seller's reasons for moving. Most sellers are moving for the same reasons that buyers are buying — they want a change. They've grown out of the house. Their kids are gone and they don't need the space. They want to move to a warmer climate. For some reason, buyers think that a seller will disclose negative details when they ask why they are moving, or give them a clue as to their motivation to sell. It doesn't usually happen.
Items that Might Be Material Facts
Some items are regarded as borderline material facts, differing from state to state. Information that someone died in the house may not be considered a material fact in some areas, even if it was a homicide, but if a buyer asks a question about it, the question should be answered truthfully. The same is true for structures that some people consider to be haunted. If a buyer asks, the seller should be truthful about a property's ghostly reputation.
People who have AIDS or are HIV-positive are considered legally handicapped by fair housing laws. A real-estate agent cannot legally answer you if your questions are about that illness, even if the agent is working for you as a buyer's agent. The correct response to your questions is that the subject cannot be discussed.
