Working your way through the steps of the sale of your home begins when determining its value, staging and listing it then awaiting an offer. Once the offer does come and is accepted by you, another flurry of paper begins. Just one of a number of documents you will need to sign as your proceed through the sale. Knowing, beforehand, the steps required to sell your home can ease some of the stress that is induced by life changing events.
The seller’s disclosure statement is one of the many documents you will see and needs to be considered carefully and answered honestly regarding the condition of your property. Some states do not require disclosures in writing, but it is good practice to put it into writing even when it is not required in order to protect your interests.
Questions that May Be on a Seller’s Disclosure
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Many states require that the seller disclose any material defects of the property that is being sold that are not easily visible or known by the buyer of the property. Federal requirements affect all states and require sellers disclose the presence of lead paint, asbestos and other items. The disclosure should be filled out honestly and completely because lawmakers and the courts have found that the seller has the best knowledge of the condition of the property.
Failure to be honest on the sellers disclosure could be expensive in the event that it is found that you had knowledge of a defect but failed to tell the buyer about it. Following are examples of seller’s disclosure requirements that might be required in your state.
- Are there any real or potential claims, court proceedings or complaints that could potentially affect the sale of the property being purchased from you?
- Is the property subject to a condominium association, the rules of a condominium, deed restrictions, or a homeowners association? Is membership to an HOA mandatory or voluntary? Are there any proposed changes to current restrictions on the property?
- Are there any property line disputes or encroachment issues with your property? Are there any shared driveways, fences, walls or other features shared with landowners that adjoin your property?
- Water intrusion, drainage, flooding problems and flood hazard areas need to be disclosed, as well as whether you are required to have flood insurance on your property.
- If there has ever been a claim to an insurance provider for sinkhole damage and a claim paid, the seller must disclose that a claim was paid and whether the money was used to repair the sinkhole damage. Has the property had any sinkholes in the past or present, settling or soil movement? Sinkholes are a big issue in some states and disclosing such is very important in a seller’s disclosure.
- Are there any environmental hazards on the property, such as mold in the home, Chinese drywall, asbestos, lead, methamphetamine, chemical or fuel storage tanks, or any other hazardous material in the home or on the property?
- You must disclose if the property now has or ever had an infestation of termites, ants or any other wood-damaging organism, as well as when the property was last treated for termites and other wood destroying organisms. (Many lenders require a termite letter for a home prior to closing, aside from a seller’s disclosure.)
- You also need to disclose whether any of the home’s systems have any KNOWN problems. This includes but is not limited to the home’s heating and cooling system, electrical wiring, plumbing, major appliances, roof, foundation, or other system issues of which you are aware.
- Are you aware of any future land-use issues such as zoning violations, non-conforming use or zoning restrictions that would affect improvements, additions or replacement of the property? Are you aware of any improvements conducted without permitting?
How Thorough Should You Be?
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As you can see, many seller’s disclosure requirements are very thorough, but you may not have actual knowledge of some of these items. If you don’t you only need to make disclosure of issues you are aware of, but be honest. If you have even an inkling of a potential issue with any of these listed items, disclose it.
You don’t need to go to the expense of a home inspection to find issues, but you might want to. It’s not a bad idea, as your buyer may very well do the same. An inspection by a professional will give you a document that can substantiate your answers on the disclosure statement, giving you a paper trail in the event that the buyer wants to cause a problem six months in the future because something has broken.
If It’s Broken and I Disclose It, Do I Need to Fix It?
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That depends. Some items could affect the price of your home if left unrepaired. A buyer will not want to have to deal with replacing the compressor on the air conditioning system prior to moving in, for example. Some repairs left undone can be a deal breaker.
Honesty Is the Best Policy
Failing to disclose major issues with your home can potentially land you in court, which could cost much, much more than telling the truth up front. There is a line of thinking among sellers that being honest about material defects can quash the deal. Walk a mile in their shoes, and think about how would you feel if you were on the receiving end in the same situation.
Whether selling your home yourself, through a Realtor or a site like Movoto, knowing the steps that you will need to take during the process will help you make a more profitable and stress-free sale. The seller’s disclosure, like all of the documentation in your seller’s package, is an important piece of the sale.
