Before selling a property, if your home has any serious issues you have yet to reveal, you must often legally fill out a selling disclosure. How do you do that?
Here are some tips for filling out a property selling disclosure:
- Be honest, even if it may lose you the sale
- If you don’t know about it, you don’t have to disclose it
- Be aware of the rules in your state
- Review the document with an attorney
In this guide to selling disclosures, you’ll learn everything you need to know, including what a selling disclosure is, what needs to go on there, and what happens if you fail to produce one. You’re certainly not going to want to miss this article whether you’re buying or selling a home!
What Is a Selling Disclosure?
Okay, so let’s start at the beginning and discuss what a selling disclosure is.
A selling disclosure, known as a seller disclosure statement in full, is mandated in the United States.
In the disclosure, you must reveal what you know about your home’s condition.
Selling disclosures are not always required for a home sale but only when the home has defects.
The goal of the disclosure is to protect the buyer and prevent them from purchasing a home with known issues.
However, a selling disclosure does not replace or supersede a home inspection. That said, the home inspection is the buyer’s choice to obtain, whereas the selling disclosure is solely on the seller to provide.
The Disclosures You Must Include on Your Form
Now let’s get into filling out your property selling disclosure form. There are at least eight disclosures you’ll want to include in your form as applicable. Below is a table for quick reference of what needs to be included, but we’ll go into more detail about each one.
Active or Past Termite Damage
In states such as North Carolina, Michigan, and Texas, if your home has ever had an infestation by wood-boring insects such as termites, you need to disclose that.
You’d also have to reveal the extent of the damage, the repairs needed, and the treatments applied.
In Texas, if your home has an active termite infestation (as well as an active infestation of other wood-boring insects) at the time you wish to make the home sale, that must go into your selling disclosure too.
Historical District Status
Living in a historic district is nice, but due to the age of the homes, the property may need more TLC. Even still, the extent that a homeowner can make alterations and repairs may be limited since the homes are historic.
Thus, even though a home is considered historic doesn’t mean it’s defective, you should still include the historical status in your selling disclosure.
In Michigan and Texas, if your home is going to come with appliances and fixtures, then you need to say so.
Some of the items you might have to disclose are water heaters, exhaust fans, rain gutters, heating and/or air conditioning, and kitchen appliances.
The reason is that buyers like to know what will be included with their purchase of a home versus what they have to buy for themselves.
This is a big one.
A water-damaged home is not the safest place to move into. What makes it worse is that depending on the season in which the house inspection occurs, it can sometimes be easy to overlook or miss water damage.
For example, in a period of drought, an inspector would have a hard time determining that the basement leaks.
It’s only when the buyer moved in, and the problem became apparent that they’d realize it, and by then, it’s too late to turn around and say you don’t want the house.
That’s why, in Michigan, if you have any water damage evidence around the roof, crawlspace, or basement, you’re required to disclose it. That’s also true if your home has had known plumbing issues or flood damage.
You have to disclose the type of plumbing system you have, such as one made of copper or galvanized steel.
Like it’s good to know a used car’s repair history before buying it, the same is true when purchasing a home.
A buyer wants the history of the home’s repairs, such as plumbing and electrical repairs, as well as other nature of repairs.
The history sheet indicates whether there are problem areas in the house that the buyer might have to deal with.
Texas law requires you to disclose repairs that pertain to the home’s structural integrity, including sidewalks, floors, the foundation, fencing, the roof, and the walls.
Is your neighborhood governed by a homeowner’s association or HOA? If so, you’ll pay monthly fees that a buyer will want to know about.
If the HOA has strict rules on what can and cannot be done to the house, that’s also something else to disclose, as is the financial health of the HOA.
Acquiring that information will often require you to get in touch with the HOA and ask.
Hazards can mean a lot of things depending on the state.
In California, the Natural Hazards Disclosure Act mandates that if your home is in what is designated as a seismic hazard zone, you have to reveal that.
New York has its own Property Condition Disclosure Act. In the act, buyers are required to disclose if their homes are in an agricultural district, wetland, or floodplain.
You also must mention whether your home has ever had any toxic, hazardous oil, or fuel substance leak or spill. If your home has ever contained asbestos, you have ever had fuel storage tanks underground or aboveground on the property, or if your home has ever been the site of a landfill, you must disclose all that too.
If your home ever had a meth lab in Missouri, you have to add that to the form.
Texas law requires you to reveal if your home has been the grounds for manufacturing meth or if it currently has lead-based paint, radon gas, urea-formaldehyde insulation, asbestos, and toxic waste.
Plenty of people think their neighbors are annoying, but depending on just how annoying, the information might have to go into your selling disclosure.
In Pennsylvania, agricultural nuisances must be reported. Michigan law requires that you disclose if your home is near any shooting ranges, airports, landfills, farm operations, or farms.
North Carolina mandates that you reveal whether your home is near any military, industrial, or commercial sources as well as smoke, odors, and loud noises.
Death(s) in the House
People die all the time, although not necessarily at home. You have to disclose if a death or deaths occurred on your premises, as some buyers might be wary about purchasing a potentially haunted home.
The laws about what you must disclose versus what you can leave off the form vary by state.
Texas law does not require you to reveal accidents, suicides, or deaths by natural causes that are “unrelated to the property.”
If a death occurred due to a violent crime or because of something wrong with the home’s condition, those deaths must absolutely be disclosed, usually regardless of which state you live in.
Deaths by natural causes in many states are not required to be on the form.
Tips for Filling Out a Selling Disclosure
We just threw a lot of information at you, and you might feel overwhelmed and unsure where to start. Well, we’re here to help with that too.
Here are some pointers that will guide you as you complete your property selling disclosure.
We know it seems tempting to lie on the seller’s disclosure, especially if your house isn’t in the best condition.
After all, how in the world will you ever sell the house if people realize all its flaws and defects?
That’s undoubtedly a tough spot to find yourself in, and we’re not trying to say it isn’t. However, a seller disclosure is a legally-binding document.
When a document is legally binding, that means it holds up in a court of law. Willfully lying on your seller’s disclosure to make the sale is fraud.
The buyer can sue you for breach of contract and intentional misrepresentation. They can ask for damages and the money to repair however, many defects are negatively affecting their quality of life in the home.
If you’re accused and found in a court of law of theft by fraud, you have to pay for your attorneys’ fees as well as three times the financial damages.
Oh, and in all this, the real estate agent you hired is at risk of losing their hard-earned license since they’re considered to be misrepresenting the home right along with you.
Yes, that can happen even if your agent had no idea that you were lying on the seller’s disclosure.
We hope this motivates you to be honest!
If You Don’t Know About It, You Don’t Have to Disclose It
A seller’s disclosure is not a home inspection, which we want to stress again. When writing your disclosure, you don’t have to go from room to room looking for issues.
Instead, you’re detailing the significant and known issues in your home, emphasis on known.
If you aren’t aware of something in your home, you don’t have to disclose it.
This is not a loophole, though. You can’t claim willful ignorance. You have to genuinely not know something is wrong or wrong with your home.
If you didn’t live there for many years before selling it, or if the house has had many prior owners or it’s an old property, then it makes sense in those situations that you don’t know the entire history of the house.
However, if there’s something you do know, you need to disclose it.
Be Aware of the Rules in Your State
As we’ve made clear throughout this article, what should and shouldn’t be on a selling disclosure varies a lot, depending on which state you call home.
Some states require you to disclose whether your home was ever painted or is painted with lead-based paint.
Others mandate that you reveal if your home was ever used as a meth lab (to your knowledge).
Some states follow the caveat emperor rule. With this rule, the buyer should do the digging into the home’s history and determine whether it has any serious defects or issues today.
Here are the disclosure laws for the other states that don’t use the caveat emperor rule:
- District of Columbia
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
Review the Document with an Attorney
Did you know that your real estate agent cannot legally help you prepare a selling disclosure in some states? Thus, asking them for help is a bad idea, as you don’t want to accidentally put their job on the line.
Instead, take the time to hire an attorney. They’ve seen many seller disclosures over their careers and can help you put yours together and fine-tune it.
Once the document has the approval of your attorney, you can send it to the interested buyer.
A seller disclosure is a document that property sellers are required to produce if their home has serious known defects or issues. The document does not replace a home inspection but augments it so a potential buyer can make an informed decision.
What needs to go into a seller disclosure form differs depending on which state you call home, so it’s always best to read up on the legal requirements for your state before you get started. Don’t try to produce your form without the guidance of an attorney, either.