Home Disclosures and Material Facts

What Should Home Sellers Disclose to Buyers?

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By law, real estate agents cannot fill out any sellers' home disclosures unless the agent is the seller or a party to the transaction. However, that doesn't stop some naive agents from completing disclosures on behalf of their clients and opening themselves up to potential lawsuits. After all, it's mostly lawsuits that have prompted the creation of many of the disclosure forms agents ask sellers to complete.

Your agent should know the disclosures required in your state. Here are some of the most common ones.

Federal Disclosures

Every state has its own laws regarding disclosures, so the forms will vary depending on where you live. However, some disclosures apply in every state. A federal disclosure such as lead-based paint is required for all transactions if the home was built before 1978. The disclosure also gives the buyer 10 days to conduct inspections for lead-based paint, unless that time period contingency is waived in writing.

The dangers of lead are significant, so this is a mandated disclosure if your home was built before 1978 or you know any possible source of lead paint on the property. Even though it's prohibited, there are still places where lead paint is sold.

Material Facts

Material facts are commonly referred to as anything that would affect the buyer's decision to purchase or the price and terms of their offer. In other words, if you have knowledge about a defect, it should be disclosed. Not doing so could subject you to a lawsuit later.

Some states have more strict requirements. In California, for insurance, sellers are required to notify buyers if a death has occurred on the property within the last three years. Some buyers are disturbed by this knowledge, and may even ask specifically. No matter what state you're in, you're required to answer truthfully if they do.

Many home buyers are fine with news of a death occurring in the house as long as it wasn't violent or gruesome. There are also buyers who believe homes are haunted by former occupants who died in the house. If you have specific details, you might want to consider sharing them with the buyer unless it pertains to AIDS. Check with your local laws and a real estate lawyer for advice about deaths involving HIV—there are many regulations in place to prevent discrimination.

Foundation Problems

In areas with basements, foundation issues or problems with water can be a major concern. It's generally required that you disclose these issues, even when you may now know all the details. If there any signs of possible water damage, it's often best to clearly disclose them and offer a credit toward remedying the issue.

External Disclosures

Some states require disclosures about items that affect or could affect the property, such as:

  • Earthquakes
  • Natural hazards
  • Zoning changes
  • Flood zones
  • Fire hazards
  • Noise pollution
  • Ground pollution
  • Air pollution

Sometimes these disclosures can seem painfully obvious. Due to the volume of lawsuits, the California Association of Realtors publishes a number of disclosure forms for buyers, some of which tell a buyer that if they purchase a home on a golf course, errant golf balls might break their windows. Why? Because a homeowner who bought on a golf course once sued for non-disclosure when golf balls smashed her picture window.

Disclosing Home Repairs

In general, it's a good practice to disclose any significant repairs you've made during your time in a home. It's also good to be careful using the word "repair," as it might imply permanent fixes that you can't guarantee. For example, if you had a leak under your sink at one point, you might disclose the repairs as follows:

"The pipes under the kitchen sink once leaked. I paid ABC Plumbers $175 to stop the leak. The pipes have not leaked since."

Are the pipes good as new? Probably not. So don't guarantee that. Simply share that you remedied the situation.

In many cases, home buyers feel a sense of relief if they know certain things have been repaired. It brings security to buyers if they know a seller has replaced a roof, upgraded electrical and plumbing, or bolted the foundation, for example.

The Bottom Line

Home disclosure laws are designed to protect both the buyer and the seller. Buyers should always ask for them if the seller doesn't volunteer the information, and sellers should always be up front to prevent any problems later. Whether you're looking for a house or putting yours on the market, work with your agent to ensure everything is properly disclosed.