What must be disclosed when selling a house


Pamela Harris

Does your potential home carry baggage you didn’t know about? Buying a home is already an expensive venture, and you might not know all the details about what your home has been through when you’re on the brink of buying.

Luckily, sellers are required to disclose certain details before closing on the home sale. What do you have to disclose when selling a house? Here’s what to look out for.

What must be disclosed? 

Under California law, all material facts that affect the value or desirability of the property must be disclosed to the buyer. There is no specific definition or rule on what is considered to be a material fact. The circumstances of each case will be evaluated in determining whether the undisclosed fact was material or not. A fact will generally be deemed material if it has a significant and measurable effect on the value of the property. For example, if a buyer would not have purchased the property or would have paid less for the property had the buyer known about the undisclosed fact, then such fact would generally be deemed material which the seller was legally required to disclose. Examples of material facts that must be disclosed include structural problems with the house, soil problems, a leaking roof, unpermitted construction, neighborhood noise problems, and anything else that a buyer would deem to be important. If there is any doubt about whether a fact should be disclosed, then that fact should be disclosed so that the seller may be protected against the claim that the undisclosed fact was material and was intentionally concealed.

Does the seller have to disclose a defect that has been repaired? 

Whether the seller must disclose a prior defect which the seller believes has been repaired is not currently clear under the law. Some court decisions state that if the defect was repaired, then the buyer would not be damaged from the seller’s failure to disclose the prior defect and therefore the seller should not be liable. However, in another court decision, the court ruled that the seller was required to disclose prior mudslides on the property even though the seller believed it had been repaired. In addition to the uncertain state of the law, the other issue is how certain must the seller be that the defect was properly and fully repaired so as to avoid disclosure. As most sellers are not engineers or contractors, a defect that the seller honestly believes has been repaired may be susceptible to future recurring failures. Under these circumstances, defects that the seller believes have been fully repaired should still be disclosed to the buyer

When in Doubt, Disclose

When in Doubt, Disclose | BPE

If there’s any doubt about whether something should be disclosed, the best policy is to err on the side of disclosure. Full disclosure will protect sellers from future legal claims and give buyers confidence that they are being treated fairly. Remember, just because a seller discloses a problem doesn’t mean the seller has to fix it. Interested buyers will be anxious to close the deal as well, and will often be willing to overlook minor issues. More serious defects may lead to negotiation, but won’t be a deal-breaker for serious buyers.

Full disclosure is important to protect both the buyer and seller, to help ensure smooth closing of the sale, and to get the best deal for all involved.

Death in the home. 

While some circumstances allow you to skip this, it’s usually required. For instance, if the death was by natural causes, it might not need to be mentioned. If the death was caused by something in the home, such as a safety hazard, drowning or another accident, that usually requires a disclosure.

Leaks and water damage. 

Seller Disclosure: The Basic Rules of What You Need to Disclose

Melissa Cohn, executive vice president of sales for Family First Funding LLC in New York, said prospective buyers should be made aware of structural issues that could impact the financing of the home. “If there are leaks [or] appliances that don’t work, they should be identified to the buyer upfront,” Cohn said. All types of water damage, including flooding and mold, should be disclosed.

Trust a Professional

Real estate agents and attorneys can help ensure compliance with the disclosure requirements for your state. Most states have specific forms that must be used when making disclosures. Even if not legally required in your state, it’s good practice for the seller’s real estate agent or attorney to use a form that clearly spells out all of the seller’s disclosures and is signed by both the buyer and the seller. When purchasing real estate, be sure to use licensed, experienced and reliable real estate professionals.

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