When you begin the contract process for purchasing a home you like, the seller has a legal duty to disclose any defects that the home may have using a property disclosure statement. The property disclosure statement is a series of documents in which the seller discloses any kinds of issues, defects, or previous repairs for the home. The seller is required to be up-front and honest regarding any past issues, and likewise, you as the buyer are responsible for being aware of everything in the property disclosure statement. If a material defect is disclosed by the seller but you fail to read the document, you will likely not have any legal recourse against the seller if and when you discover the defect after the sale is finalized.
The purpose of the property disclosure statement is bi-fold:
- To inform buyers about any issues with owning the home and
- To legally protect the sellers from potential lawsuits in the future.
While a seller may benefit at the time of sale by lying on the disclosure statement, that lie will come back to haunt them when the new owner files a lawsuit against them.
Generally, sellers are advised to over-disclose defects rather than under-disclose them in order to protect themselves from liability. Thus disclosures can include neighborhood environment or previous renovations. Common disclosures include:
- Construction done without a permit
- Repairs or renovations to the house such as electrical wiring not done to code
- Leaky windows, doors, and pipes
- Lead-based paint
- Termite issues
- Hazard issues
- Fire hazards
- Appliance, HVAC, and electrical malfunctions
- Property line or zoning disputes
- Neighbor issues
- Noise or construction issues regarding the surrounding area
- Deaths occurring on the property
- Unusual odors
- Property disputes
- Pets and wild animals
- Weather damage
- Dangerous property
Each state has different disclosure laws. Many states have pre-made forms that the seller must complete and sign, such as a lead-based paint form. Most of these forms have simple check boxes or yes-or-no questions with an option to provide a more detailed description in the comments section.
Disclosure statements are not sent to the buyer until the seller has accepted the buyer’s offer. However, the buyer is able to renege without losing the deposit if the buyer discovers a defect in the disclosure documents.
If you are a seller who failed to disclose everything in the disclosure statement or if you are a buyer who has fallen victim to an undisclosed defect, it is imperative that you seek the legal advice of a skilled real estate lawyer. An attorney can advise you on your state’s requirements for disclosure and will analyze the facts of your case in order to guide you through the best course of action.