Definition of "Disclosure statement"

Dolores Diaz real estate agent

Written by

Dolores Diazelite badge icon

Keller Williams Boynton Beach

The meaning of a disclosure statement is a legal document signed by both parties, the lender and the borrower or buyer. This statement outlines the terms and conditions, the potential risks, and the detrimental rules of the financial transaction for both parties to uphold. The language of the disclosure statement, while underlining essential rules and regulations of the transaction, is non-technical so that the general public can understand its specifications.

As the term disclosure implies to admit and share any known information about the subject because disclosure in real estate is essential, the definition of disclosure statement also lays out the information required. It can be a written or spoken statement. Generally, however, it is a document issued by the lending organization to express essential facts and terms.

The reason behind a disclosure statement

The fundamental reason for which buyers and sellers need a disclosure statement is to pass information in regards to specific terminologies, terms and conditions, as well as what the contract includes or excludes in a manner that is easy to understand for the general public. The men and women that do not have a law degree can be overwhelmed by legal terms used in contracts. Still, the disclosure statement ensures that the information is not only available to the borrower or buyer but also that it is understood, leaving nothing to interpretation or misinterpretation.

Within the disclosure statement, the borrower, buyer, or customer has all the information regarding the contract. The disclosure statement also mentions the duties and responsibilities of the borrower, buyer, or customer. It is essential for the other party that the customer knows what they expect of them.

Example of a Disclosure Statement

When you sell a property, you must specify any and all details regarding the property you intend to sell so that the buyer is made aware of the information. Standard seller’s disclosure statements will help you to open with this information. The disclosure statement must include the name of the parties involved, whether they are private or public entities. Within the disclosure statement, the seller should specify the following: the approval, date, and place when the parties signed the statement, critical specifications about the property, manner of payment (in installments, through a mortgage or upfront) as well as terms and conditions of the transaction among other things.


Need help as a:

I'm interested to:


I work in:

Reach out to the local professionals for help
I agree to receive FREE real estate advice.

Agents, get listed in your area. Sign up Now!

Here's what you'll get:

1. Full zipcodes coverage for the city of your choice for 3 months

2. The ability to reach a wider audience

3. No annual contract and no hidden fees

4. Live customer support/No robo calls

$75 - Any City - 3 Months Coverage
loader gif

Please wait ...

I agree to receive FREE real estate advice
I agree with Terms & Conditions and Section 5-5.9.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.


Popular Real Estate Terms

Individual having permission to act ob behalf of a bank or other financial institution in a specified locality to attract interest borrowers. ...

Agreement by a lender to loan money to suitable borrowers within a given time period but without identifying those borrowers. ...

Written statements about a person or business that are malicious, unfounded, and damaging. It is the basis for legal action. ...

Return before taxes on the capital invested in real estate property. ...

Exposure can have various meanings in real estate and insurance, depending on the context. Let’s have a thorough look at these scenarios! Exposure as property’s ...

Something that is of good value for the money and an attractive deal. ...

Judicially determined minimum selling price for auctioned property. For example, a judge rules that a foreclosed home may be sold for less than $200,000, ...

Institutions acting as intermediaries between suppliers and users of money. The financial markets are where those wanting funds are matched with those having surplus funds. The financial ...

Used when determining the worth of an annuity that reinvests the amount of recaptured investment at a risk-free interest rate. ...

Popular Real Estate Questions