Key Highlights
- Sellers legally responsible to disclose what they know about their property and/or neighborhood
- Realtor associations have taken steps to protect buyers with disclosure laws and forms for sellers to complete
“Buyer Beware” No Longer Works in Real Estate Industry
It used to be that the term “let the buyer beware” applied to everything including real estate properties. Not anymore.
Make sure that your selling clients disclose what they know about the property they intend to sell or they could face legal action and/or steep penalty fees.
Realtor Associations More Proactive about Disclosures
Past abuses concerning lack of disclosure have made Realtor associations become proactive in protecting buyers by instituting disclosure laws that vary state-to-state. For example, California sellers now have to disclose wildfire histories and Florida sellers have to disclose whether or not the property contains any past or present sinkholes.
Overlying Principles regarding Disclosures
Regardless of where the property is located, sellers must disclose anything about the property they know such as
- Plans to build a new freeway a block or two away from the property within the near future
- Any and all upgrades
- An unpermitted ADU or Accessory Dwelling Unit on property
If the seller doesn’t “for certain” know the answer to a question on a realtor disclosure form, say no and move on. If the seller doesn’t know (but may suspect) an answer to a question on a disclosure form, simply say, “Do not know.”
Categories that Sellers MUST Disclose
- What “comes with” or is included with the property? The refrigerator, the washer-dryer, all the paintings, some of the paintings? All of those things are typically negotiable but it’s best to state what may not be obvious.
- What features are included with the property? Is there a standard sewage connection or is there a septic tank? What specific utilities are included?
- What major defects are there in the property? Structural and/or foundation defects? Past insurance claims? Pest infestations? Pet damage to walls and/or flooring?
- Any hazardous materials and/or conditions? Mold? Asbestos? Lead-based paint? Contaminated soil or groundwater?
- Death or violent crime on property?
- Disputes with neighbors or local municipalities?Fencing issues? ADUs or renovations on neighbors’ properties that problematic?
- Noise or nuisance problems in the neighborhood? Trains? Airplanes? Busy intersections?
- Entities such as munitions storage facilities or industrial zones that close to property that could devalue property?
- Organizations or HOAs of historic designations that could have authority over the property?
- Anything else? Some states limit some required disclosures if the property is in a trust or a probate sale or if the seller has never personally lived in the house.
This category list does not cover everything but it’s a good start. Remind your seller that if she/he doesn’t disclose everything, someone else will and the seller may be held to account legally.
Thanks to Carl Medford, CEO of The Medford Group, writing for Inman.
