5 Disclosure Mistakes That Can Jeopardize A Sale
Home sellers want a quick and painless sale for the biggest price and the fewest headaches. But property condition can trip up a sale. Sellers may be tempted to remain tight tipped about condition issues in the hopes of getting the best price or not scaring away an interested buyer. This is always a bad idea. Home sellers are required to disclose major problems with the property condition before a sale closes. Fraudulent concealment of known defects is illegal. Undisclosed defects can lead to a cancelled sales contract and big lawsuits. What to Disclose Different states have different disclosure rules. California has particularly stringent requirements. Some states require sellers to complete and provide a detail property condition disclosure form. Usually, you only have to disclose problems you know about, but some states require sellers to inspect for certain defects. Issues sellers may have to disclose include:
- Lead-based paint: If the house was built before 1978, disclose known lead-based paint and give buyers the EPA Protect Your Family from Lead in Your Home
- Former meth lab
- Major neighborhood nuisances
- Natural disaster hazards
- Termite infestation
- Insurance claims filed on the property
- Judgement or tax liens
- Use restrictions and easements
- Turning a blind eye: Notice a water stain on the ceiling or puddles in the garage during heavy rains and do nothing and disclose nothing? The seller could be asking for trouble. How could the sellers prove they didn’t know about it if a major problem is later discovered?
- Failing to update: Sellers must amend the disclosure form when new information comes to light. If the roof starts leaking a week before closing, you must tell the buyer, but you’re not required to repair it.
- Not disclosing repairs: Another issue is neglecting to disclose a leak or damage you had to repair: Just because a problem was fixed doesn’t mean sellers don’t have to disclose it.
- Ignorance of state requirements: Not checking with a real estate agent or attorney for the property disclosures required in your state is a big mistake. Disclosure requirements, documents, and deadlines vary from state to state. It’s the job of the seller’s agent or attorney to advise on such matters.
- Guessing: Never guess. Sales contracts and addenda are legally binding documents, and you’re responsible for the related representations.