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What Are Disclosures?When it comes to buying a house, “buyer beware” is not a phrase that most first-time homebuyers would want to hear. Luckily, there are many regulations in place to protect buyers from getting trapped in a home that wasn’t quite what it appears.

One of the biggest protections comes from required disclosures that sellers must make about the home. Each state handles disclosure differently, but the bottom line is that sellers must disclose anything that could affect the home’s value or overall desirability.

We’ll tell you all you need to know about disclosures, whether you’re a buyer, a seller or a real estate agent!

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Common Disclosures47 states have disclosure rules of some kind, with the exception of Alabama, West Virginia and Wyoming. Here are some of the most common disclosures to be aware of, especially as a buyer.

• Lead Paint – This is a federally required disclosure for homes built before 1978, no matter what state you’re in. The EPA offers full guidelines on lead disclosure here.

• Repairs – Sellers should mention any repairs or additions made to the home, even if they weren’t properly permitted. Repair disclosures are often brief descriptions of the problem and the work done to fix it.

• Water or Storm Damage – Plumbing and leakage issues of any kind should be reported, including problems with outdoor drainage on the property. Sellers should be sure to disclose water, flooding, or mold damage as water damage is one of the most common causes of disclosure-related lawsuits.

• Pest Infestations – Termites and rodents are the chief pest disclosures to make since they can cause significant damage to a property.

• Criminal Past – Many states require disclosure of illicit activity or crimes, or even alleged haunting. Even if it’s not required, some sellers choose to share this information.

Dealing with Disclosures: Buyers, Sellers and Agents

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Buyers Be AwareTypically, you’ll receive seller disclosures once you make an offer on a property and enter into escrow, although some sellers may offer disclosures upfront to ensure a speedy sale. If you’re uncomfortable about anything listed in the disclosures document, you can typically back out of an offer without losing your escrow deposit.

It’s important to realize that a disclosure statement is not the same thing as inspection. Disclosures only include problems or issues that the seller is aware of at the time of the offer. Buyers should always make a property inspection a contingency during negotiations since an inspection can identify unknown issues and validate the seller disclosures.

You’ll be required to sign off on any disclosure report, so make sure to read them thoroughly.

I Escrow, You Escrow, We All Escrow!

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For SellersDisclosure is a serious responsibility for sellers. Disclosure documents are primarily required to inform buyers of any problems, but they also act as a legal shield for sellers. If your buyer discovers a problem with the home down the road, proper disclosures can help keep you safe from future legal action.

Disclosure forms are usually very simple for both sellers and buyers, but you need to be as honest as you can with your answers. Some disclosures may make you uncomfortable – like revealing the health of a family member – so always consults a real estate attorney if you are unsure of how to disclose something.

Real estate attorneys will also help with the esoteric disclosures that some states may require, so don’t be afraid to ask for assistance.

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The Responsibilities of an AgentReal estate agents should have access to any disclosures on a property, and a buyer’s agent is primarily responsible for alerting the buyer of any disclosures prior to an offer. The buyer’s agent should also make sure their buyer acknowledges receipt of the disclosure form and signs it to protect their rights during a negotiation.

The seller’s agent, however, must be much more diligent. Some states make hold the seller’s agent partially liable for a failure to disclose issues they were made aware of – but usually with only minor consequences.

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One Final Step for BuyersNot every state requires disclosures (remember Alabama, West Virginia and Wyoming), but that doesn’t mean you’re out of luck. If you’re buying in one of those states, or in a state without stringent disclosure rules, you can require a disclosure report as a condition in your offer, on top of the inspection.

Even if they’re not legally required to do so, most sellers are willing to work in good faith to help the deal go through. Given the amount of protection disclosures can offer, it’s a vital step toward reaching your dream home!

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Dealing With Disclosures

Read the blog about Disclosures at

www.NewAmericanFunding.com

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