What Must I Disclose When Selling My Home?

Published date: Oct 04, 2016

house model with two peopleFor decades, buying a home was a home buyer beware business - sellers didn't have to tell the purchaser a thing. Termite damage? Hush hush. Leaky roof? Make sure to show the home when it's dry outside. Murder room? Never happened.  However, states eventually started requiring home sellers to disclose certain facts about their property, especially ones that might reasonably make a difference in whether or not the buyer would still want the home.

What are the rules?

Your state may have mandatory or voluntary disclosure, but even in states where it is not mandated, a disclosure is a good idea as it can prevent you from having to deal with a lawsuit. A lawyer in your jurisdiction can advise you. Rules vary by state.

In most states, you can easily comply with disclosure obligations by filling out seller disclosure forms. They will include a range of questions: for example, whether there has been fire, wind or flood damage that required repair; if the property is in an earthquake fault zone; or if a death has occurred on the property within the last three years.

You can answer yes, no, or I don't know. The purpose of the form is to disclose all of the information you know already; you don't have to go looking for answers to the "I don't know" questions. Just be truthful, as the disclosure form is expected to be attached to the sale contract, and lying could land you in hot water later.

What do I need to disclose?

Material facts about the property for sale that could affect the market price, or impact the home buyer's decision to purchase the home are the kind of things that need to be disclosed. Ask yourself what you would want to know if you were the home buyer, and ask your real estate agent or lawyer for advice as well. Think about things like plumbing, sewage, and water pipe issues and leaks (past or present); termite or carpenter ant infestation; roofing defects or leaks; HVAC problems; foundation or drainage issues; title irregularities; and issues with neighbors.

Basically, any structural defects or legal issues should be disclosed, and federal law will also require disclosure and time for testing if there is a reason to believe the house may have lead based paint, lead pipes or repairs to pipes, or other toxic materials including radon, mercury, asbestos, carbon monoxide and formaldehyde.

What happens if I don't disclose?

If you fail to disclose known defects, you could later be sued by the home buyer once the defect has been exposed. You could be held responsible for the costs of repairs and other damages, or even be ordered to take the property back via an invalidated sale. You might even have to pay punitive damages to the home buyer.

While the home buyer or real estate agent or bank may require a home inspection, sellers do not have to have one done unless it is in the contract. Since you only have to disclose things you know about, an exhaustive search for problems is not your job. However, honesty is the best policy when it comes to the things you do know about. And most home buyers do go the home inspection route to ensure the property is to their liking. Feel free to read our blog about selecting a home inspector.

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