Selling a house can be exciting, but complicated. The laws for buying and selling your home are different in every state, however, there are some key elements that stay the same.
At this point, it’s likely you’ve discovered you’re required to offer a seller’s disclosure to your potential buyers. But what do you have to disclose when selling your house? What is a seller’s disclosure, and how do you put one together?
In this complete yet simple guide, you’ll learn everything you need to know about your legal requirements and the disclosure rules you must follow.
What is a seller’s disclosure?
During the selling process, you may attract a few potential buyers who decide to put an offer on your house. Before you get to this point, you’ll have needed to formally go through a seller’s disclosure process. This process is to ensure that a buyer is fully aware of what they are buying before they make an offer.
A seller’s disclosure is essentially a document that acts as a contract between the seller and buyer. It includes all the information legally required to disclose. The seller must include all this information to the best of their knowledge and allow the buyer to review it.
Agents, sellers, and buyers can all discuss these issues throughout the selling process. If all parties agree to the information provided and decide to move forward, they will sign the document.
Seller’s disclosures came about after several legal issues with buyers obtaining property or buildings only to later realize there were serious issues not addressed by the sellers. For example, the Florida Supreme Court handled the Johnson v. Davis case in 1985 by ruling that sellers would retain legal liability for issues not disclosed to buyers.
In other words, if you withhold information about issues with the building or property, you will be held legally responsible later.
When does a seller’s disclosure happen?
Seller’s disclosures are extremely important in the house selling process and must be available to potential buyers. Homeowners must prepare these documents once they’ve put their house on the market. If you have a real estate agent, they will typically prompt you to prepare a seller’s disclosure once you’ve signed a contract with them.
Once the seller’s disclosure is complete, you can begin showing your house to potential buyers. In some states, the seller’s disclosure must be available to any potential buyers that ask to see it before you can move forward with any offers. In many others, you can provide the disclosure after you accept an offer and allow the buyer a chance to back out.
How do you give a seller’s disclosure?
Each state has its own requirements for seller’s disclosures, which means you must consult with those laws when preparing the documents. You need to make sure you get the proper forms for your state and fill them out according to your state’s laws.
Not every state allows your agent to assist you in preparing the seller’s disclosure. For example, California real estate agents are not allowed to be involved in helping you fill out the forms. If you require assistance, you’ll need to go to a real estate attorney for help.
Once the forms are complete, you’ll be able to offer them to potential buyers. If you have an agent or lawyer, they’ll be able to help you offer them to buyers. Otherwise, you can offer them yourself.
What do you have to disclose when selling a house?
Every state is different when it comes to legal requirements for what must be included in a seller’s disclosure. Many states have specific requirements due to past legal battles that have forced new policies. You’ll need to refer to your state’s exact requirements or speak with your agent or lawyer.
In most cases, the items listed below are required to be included.
Your home and property’s history is an important section of information to be disclosed to buyers. Since you have been living there, your knowledge of the property is much more than the buyer’s knowledge. It is important for them to know which parts of the property are new and which parts are reaching their likely expiration date.
For example, if you have recently had a new water heater installed, this could add value to the property because it means the buyers will not have to replace it in the near future. On the other hand, if they notice the roof has not been repaired in 18 years, they will know to expect a costly repair sooner rather than later.
Knowing what repairs have been made also gives a buyer insight into what problems the property has had in the past. It will help them understand if there are certain issues to watch out for after they close on the home. It will also help guide them in assessing the home during the inspection.
In many cases, not all repairs are made before a buyer makes an offer. Sellers might choose to make these repairs before moving day or leave them to the buyer to handle.
The buyer can choose to buy a home as it is or agree to certain repairs not being made before closing. Regardless, the seller must disclose the repairs that need to be made to the home.
Remember that you would want to know what repairs need to be made before you made an offer, too. A buyer will need to assess not just the value of the home, but what money they will need to spend after closing to make sure the home is livable and comfortable for them. These future expenses will play a part in how affordable the home is for them.
Water, mold, and termite damage
Among other issues, water, mold, and termite damage can cause serious structural issues that you must disclose. Leaks and flooding and can threaten the structural integrity of the home, and so can pests like termites.
Mold often follows water damage but doesn’t always have to. Unchecked mold issues can damage the home and threaten the health of the homeowners.
Once disclosed, it is likely that buyers will request repairs before closing. If not, they will at least need to know about the issues before they move in.
Appliances and other essentials
In some cases, a seller may choose to take appliances with them, or appliances are broken or are missing. They may have chosen to take light fixtures, blinds, and other parts of the home that would otherwise be there.
In the cases of appliances and fixtures in the home, the seller must disclose whether they will be missing upon the buyer’s arrival. You can find lists of these essential appliances and fixtures according to your state.
Defects of the property
It is also typical for buyers to disclose the threats to the safety of the property and homeowners. Each state has its own set of threats from natural disasters that you should discuss.
For example, Florida is prone to hurricanes and flooding due to its location on the coastline and tendency for flat ground. California is prone to earthquakes, landslides, and wildfires. The midwest gets frequent tornados.
Each state will have its own guidelines for disclosing property defects according to these threats. Buyers can often ask for information about flood zones, for example, to find out if the property is at a higher risk for water damage.
It’s also very important to list health hazards, including any type of risk for exposure to radiation or hazardous materials like asbestos or lead paint.
This information will help potential buyers understand what types of insurance they need to prepare to buy and what repairs are likely in the future.
As the homeowner, you will have noticed issues with your neighborhood that you should disclose to buyers. If there have been any disputes regarding your property or issues with noise or odors, you should discuss them. You should also make buyers aware of other nuisances caused by industrial or commercial zones nearby.
If you are part of an HOA, or homeowner’s association, you should include this in the disclosure. The buyer will need to take on HOA fees and follow regulations set by the HOA once they move in.
Each state has specific issues that are common to the area for being regular neighborhood nuisances. Some areas are close to military bases and must deal with gunshots. Other areas are close to farmland and must deal with the noises, sights, and odors related to farming.
Some areas even have historic districts will special limitations on renovations and repairs to property. You will need to disclose these limitations.
It’s important to check with each state’s specific list of nuisances to be sure you’ve covered them in your disclosure.
Limitations of land use
If there are limitations on the use of your land, and there likely are, you’ll need to include these in your seller’s disclosure. Limitations of land use include zoning regulations and easements. It also includes any restrictive covenants.
For example, it’s probably that your buyers will not be able to use the property for commercial or industrial means. They might not be able to build certain structures on the land. You should also make them aware of property lines.
Liens on the property
Above all else, it’s very important to disclose any financial issues regarding the property. The buyer must know if they are putting an offer on a property that has been in bankruptcy or has any outstanding liens. By buying the property, they are exposing themselves to the liability of these legal issues.
Deaths that occurred on the property
Not all states require reporting deaths if they occurred due to natural causes. Further still, not all states require reporting suicides or deaths that came from accidents not related to the property. Many buyers, however, are deterred from buying homes due to superstition or other reasons and might ask.
Deaths that should be reported are deaths that were due to violent crimes and deaths caused by the condition of the property. These deaths are directly related to concerns that would also affect the home buyers.
Buyers will be grateful to know if the area is prone to violent crime or if the property has issues that can be hazardous.
The miscellaneous section
If you’ve made it through the forms without disclosing information that would seriously threaten the value of the home or the homeowners’ lives, you still need to disclose it. You should do so at the end of the seller’s disclosure forms so that you are not held legally responsible.
Do all states require seller’s disclosures?
All states have some form of legally required disclosures for selling homes. At the very least, you will need to provide a seller’s disclosure form regarding the presence of lead on the property. All states also have recommended forms you can choose to use, or your real estate agencies will have forms available.
A few states have required forms you must fill out as your seller’s disclosure. Not all recommended forms cover all the legal requirements, so it’s important to review your state’s laws for disclosure before moving forward. Make sure to add any disclosures required that aren’t already included on the form.
Can disclosures replace inspections?
In no case should a seller’s disclosure replace a home inspection. While disclosures are great for pointing out key issues, buyers should still move forward with a home inspection to investigate these issues further. The home inspection might also find new issues that the homeowners were not aware of when filling out their disclosure forms.
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So, what do you have to disclose when selling a house? The short answer is anything that could threaten the value or safety of the property and homeowners. Seller’s disclosures are important for every home sale, but it’s possible to get away with no staging, open houses, or repairs.
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