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Required Real Estate Disclosures When Selling Property

House for-sale-by-owner sign

What kind of real estate disclosures do you need to make to potential buyers when selling a property? In general, home sellers must disclose material defects that could affect the value of the property. It is illegal in most states to deliberately conceal material defects on your property. Several states have written disclosure laws requiring property owners to put their real estate disclosures in writing for prospective buyers to review.

Here are some important questions you may have about real estate disclosures:

Do I have to search for problems?

In most states, real property owners only have to make real estate disclosures about adverse material facts they're aware of. Real estate agents must reasonably ask about clear problems inside the property.

Some states will identify specific disclosure obligations that property owners must search for, such as:

  • Environmental hazards
  • Termite infestation
  • Asbestos
  • Radon
  • Lead paint
  • Zoning restrictions
  • The existence of a homeowners' association
  • Past liens or foreclosures
  • Sex offenders in the neighborhood
  • Nuisances, such as orders or loud noises

A few states, like California, have incredibly detailed seller's disclosure requirements to protect home buyers from fraud or misrepresentation. Many states also have real estate commissions requiring sellers to fill out a Real Estate Transfer Disclosure Statement.

Always check the real estate laws in your state. Also, local laws often control the kind of real estate disclosures you must make, so check your local and state laws. Consult a real estate attorney for legal advice if you are unsure about required disclosures.

Should I hire a home inspector?

Even though most states don't require it, getting a home inspection before selling residential real property can be helpful. If there are problems down the road, you can often rely on the inspection report in claiming that you didn't know of a problem when you made your real estate disclosures. Inspections can be a double-edged sword. Once the inspector brings a problem to your attention, there's a good chance you'll have to make a full property disclosure of the condition of the property if it could affect its value. Still, there's a strong value in certainty. Getting an inspection can save you from a potential nightmare in the future.

Do I need to repair problems I’ve identified?

Although you may have an obligation to make certain disclosures, you can sell your home as is. You do not need to repair any problems you disclose in a property disclosure statement. It is up to the buyer to deal with the hassle and potential repair costs unless there is an agreement to credit the buyer for repairs through escrow. The issues in your disclosure forms could affect a realtor or appraiser's valuation of your property. But it may be worth it to make fixes. Knowing that you repaired problems can benefit your own safety and peace of mind. It will also increase the value of your home in a future home sale.

Are there any federal laws I need to comply with?

In the home financing context, the Real Estate Settlement Procedures Act (RESPA) requires lenders to comply with disclosure laws to ensure consumer fairness. While this applies to banks and brokers, it is useful for you as a seller or borrower to be aware that some disclosures involved in the sale process are a matter of right.

If the house you are selling was built before 1978, the Lead-Based Paint Hazard Reduction Act of 1992 requires you to:

  • Give buyers a disclosure statement about any lead-based paint or related hazards in the house
  • Give buyers 10 days to test the house for lead
  • Give buyers the Environmental Protection Agency (EPA) pamphlet titled Protect Your Family from Lead in Your Home
  • Include legal warnings in the sale contract
  • Get signed statements from all parties verifying compliance with all legal requirements
  • Keep the signed acknowledgments for no less than three years from the date of sale as proof that you followed the law

How To Make Real Estate Disclosures

Most states require you to give real estate disclosures in written form. Even if your state doesn't require you to, it is still best to make your disclosures in writing. You should also get a signed written statement from the buyers that they received your disclosures.

Finally, because of the significant amount of money involved, consulting with a real estate broker or attorney may be worthwhile.

Get Professional Legal Help With Real Estate Disclosures

If you're selling a home, you must be forthcoming about certain facts and conditions, such as septic issues or water damage. You should speak with a legal professional if you have concerns about such disclosures. Find a real estate attorney near you to learn more.

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