Disclosures - What Sellers need to do.
Sellers must Disclose all Material facts:
Seller Disclosures are documents provided by a home seller to a home-buyer that outlines known issues with a property and other material facts that could or would affect the buyer's decision to purchase or could ultimately affect the original purchase price that the buyer has offered. Simply remember that the seller is most always obligated to disclose known problems that could affect the property's value or desirability.
In general, sellers should disclose any known facts about the physical condition of the property, existence of any dangerous materials, dangerous conditions, any lawsuits or pending matters, inspection reports, or any other factors that may influence a buyer’s decision.
FYI… it is illegal for a seller to fraudulently conceal major physical defects of the property. It is fully understood that some sellers may feel hesitant to reveal any minor or major problems with their home – this simply because the seller is afraid they’ll scare off buyers. But here’s a warning to sellers… purposely concealing issues may land the seller in legal trouble if they fail to disclose all known material facts. Potential for litigation also includes "non-disclosed" issues that have been previously and/or recently repaired.
I always say, “It is much better to lose a buyer by clearly disclosing all known issues than it is to spend years and tens of thousands of dollars in legal litigation”. In other words, sellers should err on the side of caution. If you know it, “put it on paper” (ie: disclose it). This is a smart move because it saves everyone time, hassle and any expense if a non-disclosed issue is in fact the reason why a deal falls apart while in escrow. Again, if the seller tries to hide something it can come back to haunt them in the form of an expensive lawsuit.
Err on the side of disclosure.
If you have even the faintest question about whether or not to disclose something to potential buyers, avoid the potential for liability and just tell it all.
“Full disclosure” of any property defects and current-or-past issues will in fact increase the buyer's confidence that you, the seller, are dealing openly and fairly with the people/buyers who want to purchase your home.
When does the buyer receive disclosure statements?
Disclosure documents are provided to buyers within days after the seller has accepted their purchase offer.
What do sellers disclose to potential buyers?
For example: Previous improvements, renovations or upgrades done by sellers are typical disclosures, as well as any work/repairs/improvements that were done with or without permits.
Other items of standard disclosures include the existence of lead-based paint, asbestos, pets on property, roof leaks (current or past), any termite issues, any neighborhood nuisances, any history of property line disputes, zoning changes and whether there any defects or malfunctions with major systems (ie: such as Furnace, A/C) or any issues with appliances… You get the idea so far?
Disclosure documents also ask sellers if they are involved in bankruptcy proceedings or if there any liens on the property.
Is a disclosure the same as an inspection?
A seller disclosure, of any kind, is not the same thing as an independent physical inspection performed by a 3rd party.
Closing notes… Follow the Golden Rule. "Disclose-Disclose-Disclose".... if you (seller) were the buyer, I'll bet you would like to know about all issues in regards to the house/property. Therefore your buyer will want to know about all issues as well.
Typically: Buyers do not get upset by receipt/disclosure of negative information, they get upset and call a lawyer when they feel they have been duped, deceived or lied to.
Oscar Castillo : Broker Associate (San Diego, CA)
- Residential Brokerage