As part of the home buying and selling process, the seller has a legal duty to disclose defects to the home using a Property disclosure statement. Property disclosure statements inform buyers of existing defects to the home, and protect sellers from liability for issues they let buyers know about before the sale is finalized.
The exact information that must be disclosed varies from state to state, and each state has its own form with questions for the seller to answer regarding defects, major repairs, or other issues that might affect the value of the home. Different types of properties may have different issues that are specific to that type (for instance, a home might have different disclosure issues than a condo unit).
The seller’s duty to disclose usually extends to issues that they know about. The seller cannot conceal defects; however they are also not required to pay for their own property inspection or do their own investigation into the possibility that the house might have problems. A buyer should always get a home inspection before finalizing the purchase.
A few states are “Buyer Beware” states that require sellers to disclose very little information about the home. Often the disclosures are limited to items that are a serious health and safety concern, such as lead-based paint or asbestos. It is up to the buyer to figure out if there are any problems with the property.
What Types of Defects Must be Disclosed?
There are a number of questions included in most property disclosure statements that must be answered. In terms of defects, sellers typically must disclose “material (significant) defects” that affect the value of the home or would influence a buyer’s decision to purchase the property. Usually these are defects that are not obvious to a buyer just by looking.
Some of the disclosures included in a property disclosure statement address:
- Construction done on the property without a permit
- Possible zoning violations
- Repairs or renovations to the home that were not done to code, such as wiring or plumbing
- Leaky windows, doors, or roof
- Plumbing leaks
- The existence of lead-based paint
- Termites or other pests
- The presence of mold
- Problems or defects to any systems, like the HVAC
- Issues with any appliances that will be included in the sale of the property
- Homeowners Association dues or other shared neighborhood expenses
- Liens against the property
- Disputes over the property line or boundaries
- The existence of any easements on the property
- The presence of wild animals on the property
- Information about the utilities for the property
- Noises or construction near the property
- Whether the property is in a flood zone
- Whether there exist any environmental hazards, like radon
- A few states require you to disclose any deaths on the property
- Some states ask about nearby sexual offenders
- Whether the property is considered a dangerous property
Thus, there are many types of disclosure issues that can arise in relation to property. Different jurisdictions may have varying laws when it comes to particular disclosures. Contacting an attorney may be needed if there are questions about whether a specific type of property issue should be disclosed.
When and How Does a Seller Make a Disclosure?
Sellers usually complete disclosures statements when they list their home for sale. Many states have standard forms that are used. Often these consist of simple yes or no questions or check boxes. These include space to elaborate or provide more details regarding the disclosures. Some states have separate forms that are specific to items like lead-based paint or termites.
The completed property disclosure statement is given to the buyer after the seller has accepted their offer to purchase the property. The buyer has the option to withdraw their offer and have their earnest money deposit returned if they find a defect in the disclosure statement that impacts their desire to purchase the property. Buyers may also use disclosures to renegotiate the purchase price.
If a seller fails to provide the buyer with a property disclosure statement the buyer can void the contract to buy the property. Again, these particular rules may vary be region and type of property, so be sure to consult with an attorney if you have any specific questions about a property.
Should I Hire a Lawyer for a Property Disclosure Statement Issue?
If you sold your home and did not disclose a known defect to the buyer, or you are a buyer who has purchased a home and think the seller failed to disclose a defect, you should consult an experienced real estate attorney.
A lawyer can advise you on your state’s property disclosure law and recommend possible defenses or remedies based on the facts of your particular case. A skilled and experienced attorney can also represent you during any litigation that may arise based on a property disclosure dispute.