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Required Real Estate Disclosures When Selling Property

House for-sale-by-owner sign

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What kind of real estate disclosures do you need to make to a buyer when trying to sell real estate? In general, you have an obligation to disclose potential problems and material defects that could affect the value of the property you're trying to sell. In addition, it is considered illegal in most states to deliberately conceal major defects on your property. Several states have disclosure laws requiring property owners to put their real estate disclosures in writing.

Do I Have to Search for Problems?

In most states, property owners only have to make real estate disclosures for problems they're aware of. That means that you generally don't need to hire a home inspector to inspect your property. Salespersons may have a duty to make a reasonable inquiry as to problems that may be readily apparent inside your home.

Some states, however, have stricter requirements and will identify specific problems that you are responsible to search for (e.g., termite damage, known lead). A few states, like California, have extremely detailed disclosure requirements, so search for the laws in your state and always consider consulting with a lawyer or real estate expert. Always check the real estate laws in your state.

Should I Hire Someone to Inspect the Property?

Even though most states don't require it, it can be helpful to hire someone to inspect your property before a sale. If there are problems down the road, you can often rely on the inspector's 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, however, since once the inspector brings a problem to your attention, there's a good chance you'll have to make full disclosure of the condition of the property if it could affect its value. Still, there's a strong value in certainty, and getting an inspection can save you from a potential nightmare in the future.

Do I Need to Repair Problems I've Identified?

No, you only need to disclose them. You can let someone else deal with the hassle and potential costs of repair unless there is an agreement to credit your buyer for repairs through escrow. The issues in your disclosures could affect the valuation that a realtor or appraiser places on your property, however, so it may be worth it to make fixes where appropriate. If your home does not sell and you are in a position to continue living in it, knowing that you repaired problems can benefit your own safety and peace of mind as well.

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 fairness for consumers. While compliance in this context applies to banks and brokers, it is useful for you as a seller or borrower to be aware that some disclosures involved in the purchase 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 regarding any lead-based paint or related hazards in the house
  • Give buyers 10 days to test the house for lead
  • Provide buyers with the Environmental Protection Agency (EPA) pamphlet entitled Protect Your Family from Lead in Your Home
  • Include legal warnings in the sale contract
  • Obtain signed statements from all parties involved 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, often on special forms that both the buyer and seller must sign and date. Even if your state doesn't require you to, it is still the best practice to make your disclosures in writing and get a signed written statement from the buyers that they received them.

Finally, because of the significant amount of money involved and potential complications, it may be worthwhile to consult with a real estate broker or attorney. In addition, local laws often control the kind of real estate disclosures you need to make, so check your local as well as state laws.

Get Professional Legal Help With Real Estate Disclosures

If you're selling a home, you need to make sure you are forthcoming about certain facts and conditions, such as the presence of termites or water damage to the property. If you have concerns about such disclosures or need additional clarity, you may want to speak with a legal professional. Find a real estate attorney near you to learn more.

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.

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Contact a qualified real estate attorney to help guide you through the process of selling your home.

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