Definition of "Disclosure statement"
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.
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