Required Disclosures When Selling Real EstateWhat you need to disclose to potential home buyers about your property.
When selling your home, you may be obligated to disclose problems that could affect the property's value or desirability. In most states, it is illegal to fraudulently conceal major physical defects in your property such as a basement that floods in heavy rains. And many states now require sellers to take a proactive role by making written disclosures on the condition of the property.What You Must Disclose
Generally, you are responsible for disclosing only information within your personal knowledge -- in other words, you don't usually need to hire inspectors to turn up problems you never had an inkling existed. However, some states' laws identify certain problems that are your responsibility to search for, whether you see signs of the problem or not. In these cases, or where you could have seen a particular defect but turned a blind eye, you could ultimately end up in court, compensating the buyer for the costs of your failure to speak up sooner.
While it's not usually required, some sellers hire a general contractor to inspect the property. The results will help you determine what needs repair or replacement and will assist you with preparing any required disclosures. An inspection report is also useful in pricing your house and negotiating with prospective buyers.
If you have even the faintest question about whether or not to disclose something to potential buyers, avoid the potential for liability and tell all. Full disclosure of any property defects will help increase the buyer's confidence that you're dealing fairly. And it will protect you from legal problems later, such as buyers who want out of the deal or who claim damages suffered because you carelessly or intentionally withheld information about your property.
And remember, just because you disclose a problem doesn't mean you must repair or correct it. The disclosed item can become a point of negotiation between you and your buyer.
Most states' laws mandate that disclosures be on special forms the seller must sign and date. Be sure the buyer acknowledges receipt of the disclosures by signing and dating the forms as well. If your state doesn't require a specific disclosure form, be sure the buyer otherwise affirms receipt of your disclosures -- in writing.
Check with your real estate broker or attorney or your state department of real estate for disclosures required in your state. Also, check with your city planning department for information on local ordinances and disclosures that affect your sale. Finally, be aware that real estate brokers are increasingly requiring that sellers complete disclosure forms, regardless of whether or not it's legally required.