6 Disclosures Sellers MUST Make or it Could Cost You

Disclosures Must be Made by Sellers or it Could Cost You

Disclosures Must be Made by Sellers or it Could Cost You

These days, the trend among cash-strapped home sellers seems to be to say less in hopes of getting more at closing. But in the long run, this less-than-full disclosure can prove costly.  Sellers must disclose anything that could affect the property’s value or desirability, from big problems such as a compromised foundation to — in some states — simple neighborhood nuisances such as that dog next door that barks every night. Disclosure laws vary. Some states require sellers to look for and cite certain problems even if they are not aware of them. No one gets out of these disclosures: Even those marketing a home “as is” have to obey state disclosure laws. Lawsuits stemming from nondisclosure of a property’s problems are becoming a bigger issue. About 75%  of real estate agents ranked this issue among their top three current and future issues. Here are the six things that a seller must reveal about a home to avoid legal trouble down the road.

1. Repairs
This is a pretty broad category but one that a lot of buyers seem confused about. If you have made repairs to your property, you should disclose them, even if the problem has been resolved. Any repairs to the roof, plumbing, electrical system or heating and cooling unit that you are aware of — including any repairs disclosed to you by previous owners — should be laid bare, as well as any drywall or structural repairs to remedy water damage. The bottom line is that sellers should disclose anything that is not readily identifiable by the buyer.

2. Termites
One such invisible problem is termites. If your home has a history of termite infestation, especially if it has been treated more than once, it should be disclosed to the buyer, because it can greatly affect the value of the home. To lessen the impact of this disclosure, sellers can get another termite inspection before listing their home that shows it to be clear of the pests. This disclosure, along with any information about treatment warranties that could be transferred, should be given to the buyer at closing.

3. Water damage/mold

If the home has had a leaky roof, a flooded basement or dampness and mold in certain areas, these water issues must be disclosed. A good home inspector can often spot the signs of water damage, even if they have been painted or plastered over, McGraw says. But it’s no sure thing. That’s why water damage is one of the biggest causes of disclosure-related lawsuits.

4. Lead
If you are selling a house built before 1978, you must comply with a federal law that requires disclosure of all known lead-based paint and hazards in the house. The contract must include that warning as well as signed statements from all parties verifying that the requirements for disclosure were met. If a seller doesn’t comply with these requirements, the buyer can sue for triple the amount of damages suffered.

5. Natural hazards
Some states, such as California, require sellers to disclose any risk of natural disasters such as a flood plain or earthquake zone or susceptibility to wildfires. This disclosure is meant to warn buyers of the financial risk and danger they face from these catastrophes, as well as alert them to trouble they may face in getting insurance for a home in that location.

6. Infamous past
Even a home’s notorious past must be disclosed. One New York case many years ago involved a home that reportedly was haunted and was the subject of many articles and tours. When that ghoulish past wasn’t disclosed to the new buyer, the seller was successfully sued for nondisclosure, because that notoriety was likely to diminish its resale value. The same holds true for a home’s criminal past. Some states require disclosure of murders on the property, others do not. But since these horrific events tend to lower the value of a property, most real-estate agents choose to disclose them rather than risk legal action.


The bottom line is that if there’s a question in your mind about whether or not you should disclose something, you probably should. Anything that the buyer would feel misled by is something that you should disclose. However, disclosure does not mean sellers are obligated to fix a home’s problems.  Rather, the disclosed issues can merely become a point of negotiation between buyer and seller.