When setting out to sell a house you need to disclose a lot of things about your property. But the seller’s disclosure rules and regulations are complicated. They vary from state to state and often leave sellers confused.
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In addition, you should also have the settlement agent review the paperwork so you cover all bases.
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*Seller disclosures are primarily the responsibility of the home seller. Regardless of the service you engage in, you are required to ensure seller disclosures provided by you are complete and accurate to your best knowledge. Houzeo is not a brokerage or a licensed agent. It is a tech platform and as such the tips presented here should not be construed as any advice for which a real estate or attorney license is required.
What Is A Seller’s Disclosure?
A seller’s disclosure statement form is a standard checklist form containing material defects and features of the property. It provides information about the property that may negatively affect the value of the house.
If there are material defects in a property that may impact the value of the property AND the seller is aware of them, the seller should disclose them. However, sellers should report these defects to the best of their knowledge and in good faith. From pest infestation to pending legal issues, you should disclose any known information. This will help you avoid future disputes.
Remember, every state has different seller’s disclosure laws. So, it’s advisable to review the form with your real estate agent or lawyer as per the statutes in your state. Usually, the disclosure form is completed along with the listing paperwork – especially in the Multiple Listing Service (MLS) provided by the listing agent.
Importance Of Seller’s Disclosure
Property Disclosures serve the following purpose in real estate transactions:
|🔎||Give Complete Information About The Property||Disclosures help communicate the defects present on the property. They ensure that all the stakeholders involved in the transaction are well aware of the property's history.|
|⚖️||Protects Sellers Against Legal Liabilities||Once you disclose all the known defects present in the house or which come to light during the inspection, you may be exempted from any future liability against those defects.|
|👍||Develops Credibility||Honesty, accuracy and transparency are of utmost importance when selling your house. Disclosures are a way of achieving all of these and thereby enhancing your credibility.|
When To Provide Seller’s Disclosure?
You can provide seller’s disclosure on either of the two occasions:
|Before Receiving An Offer||Disclosing the house defects beforehand ensures that potential buyers are well aware of your property’s condition. This would get you genuine buyers and not much room will be left for them to negotiate the prices.|
|After Receiving An Offer||Sellers get a fixed amount of time to submit their disclosures to the buyers after accepting an offer. This duration differs from state to state. It is usually submitted simultaneously during the inspection process. Depending on your house disclosure statement, the buyer decides to either back off or go ahead with the offer.|
What To Include In Seller’s Disclosure?
Defects and facts you need to disclose vary across states. For instance, in Arizona, you need to disclose if your house is located near a military airport, and in California, you need to disclose if your house lies in Mello Roos Areas. To learn more about what you need to disclose know house disclosure requirements in your state.
The state disclosures forms will differ in format but they contain some general points such as:
- Details about the nature of the occupancy of the property.
- Questions related to property defects which you can answer in “Yes”, “No”, or “Don’t know”.
- A list of issues that sellers need to check off (if present). The list of these defects will differ depending upon the state.
- Space to provide additional information about the property.
Disclosure forms at times are multi-page and can become difficult to find and understand. Thus consulting a licensed agent or a Realtor from a real estate company is advisable. Houzeo can make this easy for you.
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Common Real Estate Disclosures
Although the content of the real estate disclosure form entirely depends on the state, there are basic and vital disclosures most states include in their form.
For buyers, these are the crucial information you have to review and double-check. And for sellers – if you’re new in selling your home quickly or now an experienced seller – these are property defects you have to pay attention to and must include in the form.
|Things To Be Disclosed||Description|
|Title Violations||The seller should provide complete rights, together with the title documents of the property to avoid legal disputes. You should also disclose legal claims against the property that could affect the transaction.|
|Hazards||The seller must disclose all the risks and hazards their house is vulnerable to. This may include lead based paint disclosure, flood risk disclosure, radon gas disclosure, etc. |
This helps buyers to make a more aware decision. It also gives them a heads up of things that lie ahead.
|Structural Defects||Homebuyers must be aware of the structural state of the property. This includes roof leaks, basement flood, dry rot, or attic insulation. |
Material defects, such as chimneys, pools, garage floors, etc. should also be disclosed. Sellers should also mention pest infestations.
|Water Source, Well, or Irrigation Systems||Sellers should inform buyers about the water source. The presence of any irrigation options or sprinkler systems should also be disclosed. |
Sellers are also expected to disclose water pressure problems along with the condition of the water pipes.
You should also inform if there are any wells on the property, and notify whether they are sealed or currently not in use.
Apart from these, you need to also inform buyers about the condition of the septic tank.
|Electrical, Heating, and Plumbing Systems||Make sure the buyer is notified about past or present electrical issues. Examine if the breakers are still functional. For buyers, ask certifications/permits from the seller to authenticate the system’s condition. |
Other things may include are appliances, internet, cable, sauna, pump, etc.
|Water Heater System and HVAC||Inspect how old the water and gas water heaters are. Both the Heating and HVAC systems should be maintained or replaced if necessary. |
It’s advisable to ask or include how long the system is running to estimate the duration of its functionality.
Do You Have To Disclose A Death In a House?
Some buyers are concerned with the history of the property. The death of a person is one of the things people tend to be superstitious about. Thus some states like California, make it mandatory to disclose prior deaths in the house.
Lesser-Known Property Disclosures
Some state-specific seller disclosures are usually not known to home sellers. A few of them are as follows:
|Paranormal Activities||In some states, sellers have to disclose any known phantom activities taking place in their house. Since very few states require sellers to disclose such things, it is one of the lesser-known disclosures that you should be aware of.|
Note: At present 4 states in the US specifically mention paranormal activities in their seller disclosure laws. These are New York, New Jersey, Minnesota, and Massachusetts.
|Nearby Sex Offenders||To be doubly sure of the buyer’s safety, sellers should disclose about nearby sex offenders. For example, in California, all the stakeholders involved in the transaction process have to sign Megan’s Law DataBase Disclosure Form. It puts the onus on the buyers to search the sexual offender’s database if they desire.|
|Military Airport Disclosure||Some states like Arizona and Virginia require sellers to disclose the presence of nearby Military airports. This is to make the buyers aware if the property falls in the high noise contour or if it is susceptible to accidents.|
What Is Caveat Emptor In Real Estate?
Some of the states have a “Caveat Emptor Rule”, a neo-Latin phrase that also means “let the buyer beware”. The rule states that it is the buyer’s responsibility to find out if there are major or minor defects with the property.
It serves as a warning to the buyer. And if he/she does not perform the necessary due diligence to inspect, it’s entirely not the seller’s liability if the property does not meet the expectation.
However, there are certain topics and issues the owner is not obligated to disclose. Certain information such as homicide and suicide are mostly not mentioned in the seller’s disclosure form. They can be regarded as non-relevant and could be left untold.
Types of Disclosure States
Depending on whether the sale price of a property is readily available to the public, states are divided into two categories: Full Disclosure States and Non-Disclosure States
|What Is A Full Disclosure State?||In some states, like Maryland, you can find the sale price of a property on various real estate websites. This provides greater transparency and efficiency in the real estate markets.|
|What Is A Non Disclosure State?||Unlike full disclosure states, in nondisclosure states, the selling price of a house is not available to the masses on an open source. |
📝 Note: At present 12 US states practice non-disclosure. These are Alaska, Idaho, Kansas, Louisiana, Mississippi, Missouri (some counties), Montana, New Mexico, North Dakota, Texas, Utah, and Wyoming.
What Seller’s Disclosures Are Applicable To Me?
Property disclosures in the US can be segregated into two types based on who governs the laws related to them.
Federally Required Seller’s Disclosures
These are real estate disclosures governed by federal laws and sellers across the USA are required to furnish these when selling their houses.
Lead-Based Paint Disclosure
Houses built before 1978 are required by law to complete a lead paint disclosure form. Every seller must notify the new homeowner of any present or past exposure to lead. The seller must also provide an EPA pamphlet called “Protect Your Family from Lead in Your Home.”
The buyer must acknowledge receipt of this pamphlet and information on lead-based paint hazards on the EPA disclosure form.
The seller can provide 10 days for the buyer to do a risk assessment or paint inspection for lead-based paint or lead-based paint hazards. Failure to comply with the federal disclosure could lead to litigation and sellers may have to suffer charges for the damages (which usually could cost over $10,000).
State-Required Seller Disclosures
States have varying seller disclosure requirements. Click on your state below to read through the seller disclosure requirements in your state.
|Northeast||Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont|
|Midwest||Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin|
|South||Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, Washington DC, West Virginia|
|West||Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming|
Locally Required Seller’s Disclosure
Apart from Federal and State Disclosures, at times sellers are expected to provide disclosures that are specific to the county or the city. Here are a few of them:
|Prisons and Jails||This is a real estate disclosure specific to the county of San Diego in California. Under this disclosure, buyers are made aware of the fact that San Diego County has several jails, prisons, detention centers, and work camps.|
|Protected Trees||In the city of Los Angeles, sellers are supposed to provide details about a protected tree that may be present on their property. Native trees belonging to LA and having specified dimensions qualify as a “Protected Tree”.|
|Septic Tanks||In the county of Allen, sellers are required to disclose the presence of a septic system along with its condition. They have to disclose it by filling the county’s Seller Disclosure Form For Properties Served By On-site Sewage Systems.|
What Happens If A Seller Lies On A Disclosure?
Many times, buyers find that a seller lied on the property disclosure statement. In such cases, several actions can be taken against the seller.
|Breach Of Contract||A buyer can file a lawsuit for breach of contract with intentional misrepresentation. The penalty for lying on the seller’s disclosure includes the cost of repairs along with attorney fees.|
» More: Why You Should Hire a Real Estate Attorney
|A Case Of Fraud||The buyer can file a case of fraud against the seller. If the buyer succeeds in doing so, he/she can claim punitive damages as well. This is usually two or three times bigger than regular compensation.|
📝 Note: The seller’s intention of defrauding the buyer has to be proven beforehand.
|Recission Of The Contract||In some cases where the lie causes the buyer huge losses, courts can order equitable relief in the form of a recission of the contract. Under this, the contract becomes null and void as if it never existed before. The aggrieved party is brought back to a position had the sale not occurred and all the expenses made by the buyer are returned as compensation.|
What happens if the seller has made a mistake in the disclosure form or forgot to mention any facts?
|Compensation Of Damages||The buyer can file a suit for compensation of damages caused to the buyer because of being misled by the seller.|
|Suit For Negligence||A suit for negligence or negligent misrepresentation can be filed against the seller. Here damages can be claimed against the mistake made by the seller.|
Most Common Mistakes By FSBO Home Sellers In Disclosures
The main object of seller’s disclosures in any area is to give clarity and perspective to a buyer. Buyers who are looking for a home usually have certain criteria in mind before searching a home. A seller disclosure acts as a bridge to close these doubts, giving buyers a reason to have faith in you and your deal.
One of the biggest mistakes a seller can make is not giving disclosures at all. The lack of trust between a buyer and seller can demotivate a buyer from considering your property altogether. Hence, it is suggested that sellers complete all disclosure formalities as soon as possible, even though it may not be legally required in your state.
Likewise, sellers also get an option to mark a point as ‘unknown’ in disclosures. This gives you ample opportunity to be honest in your disclosures. Also, marking a certain disclosure clause as ‘unknown’ shifts the burden on a buyer to inspect that particular problem. Hence, don’t make the mistake of lying on your disclosures, as that would count as fraudulent misrepresentation and attract a lawsuit.
Most state laws prescribe that the disclosures should be provided before closing. As an FSBO seller, it is your duty to provide disclosures as soon as possible, since you do not have a real estate agent to do these things for you.
- ✍️ Pro Tip: Sellers who are selling their house the FSBO way are advised to keep their Disclosure Statement ready before listing on the MLS. It increases your credibility and reliability from a buyer’s perspective, as they get an idea of the property’s condition early on.
Pro-Tips To Minimize Issues In Seller’s Disclosure Statement
|Review And Verify||There’s a time allowance (some permit 10 days) to review and verify everything about your Purchase Agreement or FSBO Contract —also the square footage, home usage, and marketing.|
|Ask Questions||Ask questions when in doubt. This would help you in avoiding future troubles.|
|Hire A Professional Inspector||A professional home inspector can help you gather backup information about the property’s condition. You can also opt for a pre-inspection before listing.|
|Disclose Everything||To avoid problems in your home disclosure statement disclose everything you know honestly. Even though it’s a minor issue, you must disclose it.|
|Get A Licensed Agent Involved||The best way to avoid seller disclosure issues is to get an experienced real estate agent. Low-commission Realtors can help you manage and assist you in the process along the way.|
» More: How to find realtor? Here’s our guide on how you can find a realtor who will assist you in your real estate transaction.
- ✍️ Pro Tip: List Your Property With Houzeo
One of the best ways to minimize problems in your seller’s disclosure is to Purchase the “Contract to Close Upgrade Package”. A Licensed broker will review your paperwork to make sure it is appropriate. In addition, you should also have the settlement agent review the paperwork so you cover all bases.
» More: Start your FREE listing NOW!
Final Word: Seller Disclosure Requirements In The US Are Complicated
A seller’s property disclosure form is a vital document when putting your house for sale. Sellers need to take care of federal, state as well as county/city disclosures.
To bypass the complications associated with them (and other paperwork), sellers tend to opt for a real estate agent for which they have to spend 5%-6% commission. To bypass these commissions many sellers choose to sell their houses by owner. Read how to sell a house by owner to know more.
By selling your house on For Sale By Owner websites, you can bypass these commissions but accessing all the disclosures becomes difficult. Some states like California have more than 70 pages of disclosure statements. How do you plan to tackle this?
HOUZEO can solve this issue for you.
By listing your property with Flat Fee MLS services like Houzeo, you get access to all forms in electronic format. And that too, for FREE! Houzeo has segregated all the disclosures state-wise so that you don’t have to hunt for them.
Check out some of the Houzeo reviews and how it has helped customers around the US.
Real People, Real Stories
🤔How to List For Sale by Owner on MLS? – Are you an FSBO seller? Here’s our guide on how you can list your home on the MLS smoothly.
Frequently Asked Questions (FAQs)
What is the most common disclosure in real estate?
The most common real estate disclosures are:
(1) Title Violations
(3) Structural Defects
(4) Water Source, Well, or Irrigation System
(5) Electrical, Heating, and Plumbing Systems
(6) Water Heater System and HVAC
(7) Death in the house
What does SDS mean in real estate?
SDS stands for Seller's Disclosures Statement. It is a form that a seller needs to fill for disclosing various facts and defects of his/her house.
When selling a house do you have to disclose disputes with neighbors?
Yes, it is generally recommended to disclose neighborhood disputes.
Do I have to fill out a seller's disclosure?
Yes, every home seller in America has to fill out a seller's disclosure.
What is an exempt seller disclosure?
Exempt seller disclosure is applicable when a house is held in a trustee's name but he/she doesn't reside in it.
Can you sue a home seller for not disclosing?
Yes, you can sue a seller for not disclosing if your attorney can prove the seller's fraud intention.
What is a disclosure state?
States in which the sale price of the property is made of the public record are known as disclosure states.
When does the seller get a closing disclosure?
As per law, you should receive your closing disclosure at least 3 days before the closing.
Does seller have to disclose previous inspection?
It is not mandatory to disclose previous inspections to potential buyers.
What is a closing disclosure in real estate?
It is a form that gives details about the mortgage loan selected by you.
Resources that Might Help You
- Selling a House As-Is: Selling a house as is in real estate transactions means that the buyer gets the property in the existing condition. Read Houzeo’s guide to know more.
- Best Realtors in US : Check out the 12 best realtors in the US.
- Discount Real Estate Brokers : Know more about the best Discount Real Estate Brokers.
- Closing Cost : Closing Costs are the final step sellers and buyers need to complete to finalize the real estate deal. Here’s all you need to know!
- Seller Closing Costs: Check out what American home sellers pay at closings
- Buyer Closing Costs: Check out what American home buyers have to pay at closings
- Cost to List on MLS: Find out how much it costs to list your house on the MLS.
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