Important: The blog article below is informational, and should not be deemed as legal advice. Houzeo and its bloggers are not attorneys. For any questions and legal advice, you should consult a licensed attorney.
Selling a home in North Carolina? Here are the three disclosures you should be aware of:
- Federal Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards
- State of North Carolina Residential Property and Owner’s Association Disclosure Statement
- North Carolina Mineral and Oil and Gas Rights Disclosure
In real estate transactions, sellers have a legal obligation to disclose any issues about the property to potential buyers. Sellers are obliged to answer questions addressing certain facts such as the age and condition of the property, the source of its water supply, the nature of its sanitary sewer system, the presence of hazards/toxic items, and any structural issues.
Although disclosure laws differ from state to state, the general guideline is that sellers are only required to disclose issues of which they have knowledge of or can be reasonably expected to know about. In other words, the sellers are usually under no obligation to hire a home inspector to verify or shed light on issues that they are not yet aware of, or cannot be aware of reasonably.
If you’re preparing to sell your North Carolina home, what exactly must you disclose, and how?
North Carolina law mandates that sellers identify any known defects in their property before a purchase contract is signed. The purpose of this is to make sure that buyers are not surprised with a problem when they move into the home and to defend the sellers from legal proceedings.
Disclosure Requirements in North Carolina
The Residential Property Disclosure Act
Codified as North Carolina G.S. 47E, the act requires the sellers of residential real estate such as single-family homes, individual condominiums, townhouses and the like, and buildings with up to 4 dwelling units to complete a Residential Property and Owners’ Association Disclosure Statement disclosing conditions and defects of the property. This applies to any transfer of residential property including leases with an option to purchase, whether a licensed real estate agent is involved.
The form specifically asks sellers to respond to all thirty-eight (38) questions by filling in the requested information or by placing a checkmark in the appropriate box. The questions address the characteristics and condition of the property which the owner has actual knowledge.
The North Carolina Real Estate Commission provides the approved form – a four-page document that contains all of the necessary information. The seller must fill it out and provide written copies of this form to potential buyers no later than when the buyer makes an offer to purchase the property.
For some transactions, this Disclosure Statement is not required. For a complete list of exemptions, see North Carolina G.S. 47E-2.
The Mineral and Oil and Gas Rights Disclosure
Codified as North Carolina G.S. 47E-4.1, this provides for a further disclosure relating to mineral, oil, and gas rights, which is somewhat unique to North Carolina.
The form has a series of six questions that the seller must answer to disclose whether the mineral, oil and gas rights for the property are owned by someone other than the seller.
Sellers sometimes lease or sell the subsurface mineral rights on their property to a third party. This means that if sellers have “severed” their mineral rights, the third party could potentially have the perpetual right to drill, mine, explore and remove any of the subsurface mineral resources on or from the property. These mineral or materials could be extracted directly from the surface of the property or from a nearby location even if the property is sold to a new owner.
The North Carolina Real Estate Commission provides the approved form – a single page document that contains all of the necessary information. The seller must fill it out and provide written copies of this form to potential buyers no later than when the buyer makes an offer to purchase the property.
For some transactions, this Disclosure Statement is not required. For a complete list of exemptions, see North Carolina G.S. 47-E2(b).
Federal Disclosure Requirements
The Residential Lead-Based Paint Hazard Reduction Act
The Residential Lead-Based Paint Hazard Reduction Act passed in 1992 requires the disclosure of any lead-based paint or chipped paint in any property built before 1978. Every buyer of any residential real property must be notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning.
This federal law requires the sellers of residential real estate to complete a “Lead Warning Statement” to provide the potential buyer with any information on lead-based paint hazards from risk assessments or inspections in the seller’s possession and notify the buyer of any known lead-based paint hazards.
Sellers must provide a 10-day period for buyers to conduct a paint inspection or risk assessment for lead-based paint or lead-based paint hazards. Get a lead hazard inspection firm here.
Why should you be open honest in making disclosures about your North Carolina home?
Disclosure laws are meant to protect both sides of the home-purchase transaction, putting the buyer on notice and preventing the seller from being held liable for future problems. Full disclosure will protect sellers from future legal claims and give buyers confidence that the seller is being transparent, and that they are aware of material items that may impact the value or habitability of the property they are purchasing.
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 may not be a deal-breaker for serious buyers.
Full and thorough disclosure is important to protect both the buyer and seller, to help ensure a smooth closing of the sale, and to get the best deal for all involved.
Important note: If there’s any doubt about whether something should be disclosed, the best policy is to err on the side of disclosure.
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