7 Things To Include In a Seller Disclosure Statement
September 27, 2021
You can get a decent sense of the property from the online listing and tour. You can even ask the seller pointed questions to gather as much information as possible, but will all of this data give you a complete picture of the property and its history?
Maybe or maybe not.
Luckily, there’s one resource that will provide you accurate information about the property so that you can make an informed decision – a seller’s property disclosure statement.
What is a seller’s disclosure?
A seller’s disclosure is a legal document that contains information on the current condition of the property, explaining its conditions, which may negatively impact the buyer’s decision.
As a buyer, you need to know what has been broken or repaired in the house you are interested in. A seller’s disclosure provides official information on any problems the house has had. Although local laws differ from state to state, a typical seller’s disclosure will include 7 important details.
7 Important Disclosures a Seller Must Make
1. Repair History
Knowing what is repaired, broken, old, or new in the house you are interested in is vital. It’s how you discover all of the costs that may potentially come with buying a house.
The information about a house repair that you can expect to find in a seller’s disclosure statement includes:
- What was repaired?
- Has it been completely fixed?
- Is there any risk for the future?
- Is there any ongoing maintenance needed?
The answer to each of these questions could have an influence on your decision to buy the house.
2. Safety Hazards
One of the most important disclosures you’ll want to look for is safety hazards. Seller disclosures will have any and all safety hazards on it. Here are some of the most common hazards that you would want to be aware of before you buy the house:
- Lead paint
- Toxic waste
- Termite damage
- Water damage
Any of these damages can be a deal breaker, since it puts the buyer and the people moving in the house at risk of a health crisis.
3. Death in the house
We’ve all heard ghost stories and seen horror movies involving a previous death in a house that comes back to haunt the current homeowners.
Although a prospective buyer may not be worried about ghosts, many are worried about safety hazards or have superstitions in general. Seller disclosures are where you will find out about any previous deaths in a house.
While death due to natural causes like illness is completely unrelated to the property, there can be examples where accidental deaths might raise red flags.
For instance, the death of a child by drowning because there was no safety fence on the pool.
Not all states require you to include death caused by natural causes in a seller’s disclosure, but if you are concerned about liability as a seller you can always just disclose it upfront.
4. Nuisance in the neighborhood
Excessive noise, unpleasant odor, smoke from nearby industries or any nuisance from a commercial or industrial source.
As a seller, you have to include information about any disturbances on your disclosure form which basically means anything in your neighborhood that could be a cause of annoyance to the prospective buyer.
Officially, there are only three states i.e. Pennsylvania, Michigan, and North Carolina that require you to disclose information about neighborhood nuisances.
However, providing this information upfront will prevent potential buyers from being caught off guard by the disturbances in-person.
5. HOA (Homeowner’s Association) information
A homeowner’s association (HOA) is the organization responsible for making and enforcing rules for properties in a planned community or a building.
Owning a house governed by the HOA does ensure maintenance, cleanliness, and a cohesive environment. However the restrictive rules and high fees that come with it can be seen as huge negatives in some home buyers eyes.
As a seller, you must disclose whether the house you are selling is governed by a homeowner’s association and the obligations that come with that. Forgetting to disclose such a fact could land you in legal trouble.
For instance, in one such case, a home owner forgot to provide the buyer with meeting notes from the homeowner’s association. Afterwards the buyer was assessed for $15,000 in renovations by the HOA, the buyer did not hesitate to sue the seller and received a hefty compensation.
6. Property liens
A property lien is the legal ownership right that a lender receives until the owner repays the loan.
If there are existing liens on a property, then it cannot be sold without the permission of the lender. Not only does the owner need to get permission from the lender to sell it, but they must also disclose this fact to the buyer before making the deal.
Working with an expert or real estate agent is important when dealing with property liens. Real estate agents understand the nuances and intricacies of property liens well and sometimes can even negotiate a way to pay the liens off at a lower price.
7. Missing items
Buying a property without discussing what appliances come with it can cause easy confusion. It’s common for buyers to see appliances in the home showing that are then not present after they’ve bought the house.
In order to avoid confusion, sellers should put what items come with the property on the disclosure. Are you leaving the microwave, refrigerator, heating, and cooling system, exhaust fans, blinds, the lighting fixtures?
As a seller, you must disclose even the smallest details in the disclosure statement to avoid any last-minute changes that could potentially send the buyer away.
The Bottom Line
A seller’s disclosure statement is one of the most important documents about a property. It aims to ensure complete transparency in the real estate transaction. Many states have a specific seller disclosure requirements that you need to fill out as a seller.
However, not all states have a set format or even a form. In such states, you will find that the real estate associations have their own specific forms, which you need to fill out to disclose important information about your house.
Remember that as a seller, you should disclose everything that is important for the buyer to know to avoid any kind of trouble, legal or otherwise. Get the help of a real estate attorney when creating your seller’s disclosure statement so that they can ensure its in compliance with state’s laws, because it’s common for sellers to face legal troubles over not disclosing some basic information.
If you don’t want that to be the case with you, then you need to take the seller’s disclosure seriously.