What Is a Seller’s Disclosure? A Complete Guide
Transparency about selling your home never looked so good
Highlights
Check your state and local laws for disclosure requirements.
Failure to disclose the appropriate information on the seller’s disclosure could result in a lawsuit.
Most states require a written seller’s disclosure after an offer.
If you’ve renovated your home to tip-top shape and are preparing to sell your house, you’ve likely stumbled upon an important element of the home-selling process—the seller’s disclosure.
Before you get started hosting open houses and speaking with prospective buyers, you should understand the type of information the real estate disclosure requires you to provide to them. Let’s take a look at what you need to know about seller’s disclosures and what it may contain depending on where you live.
Seller’s Disclosure, Defined
A seller’s disclosure, also known as a property disclosure, contains a written description of legally required disclosures to inform prospective buyers of important details about the condition of your home. The purpose of this legal document is to provide a transparent view of the home’s current and previous issues so that the potential buyers can make an informed decision about the sale. Luckily, your local real estate agent can help you navigate this step of the selling process.
What Happens If I Fail to Disclose Information?
If you don’t disclose pertinent and required information about the property, you risk being sued by the buyer for intentional misrepresentation. This situation can result in a lawsuit where you might:
Be required to make payments to repair the damage
Risk rescission of the home sale
Be charged and convicted of a crime
8 Common Types of Seller Disclosures
The seller property disclosure statement typically requires the home seller to provide the following types of disclosures, with an emphasis on current, accurate information. Remember to check your state and local laws to ensure your seller’s disclosure is comprehensive to avoid a potential lawsuit.
1. Property Damage Disclosure
This disclosure includes actual and potential damage to your property from structural, material, electrical, and even pest issues. A few problems you may need to disclose include:
Termite damage
Asbestos
Lead paint
Electrical issues
Plumbing problems
Water damage
Mold
Presence of radon
2. Natural Hazards Disclosure
For homeowners who live in an area prone to earthquakes and other unpreventable forces of nature, you’ll likely have to fill out a Natural Hazards Disclosure before selling your house. Every state has different codes that define hazard zones, so check your state and local code to determine whether you need to provide buyers with this disclosure.
Here are few of the most common natural hazards you may be required to disclose:
| Natural Hazard Zones | Potential Requirements |
|---|---|
| Flood hazard zones | For homes with a one percent chance of flooding per year |
| Seismic hazard zones | For houses at risk of landslides and liquefaction due to earthquakes |
| Earthquake fault zones | For homes near earthquake faults |
| Dam inundation hazard zones | For properties downstream of dams |
| Wildfire hazard zones | Homes at risk must have 100 feet of space to protect from wildfires |
| General fire hazard zones | Disclosure of fire hazard risk due to climate, topography, and more |
3. Environmental Hazards Disclosure
If your home has a present and known environmental contamination, you’ll need to provide the home buyer with the necessary details per your state’s laws. For example, some states require that sellers disclose whether their home was formerly condemned as a location for the production of methamphetamine.
You might also need to disclose if the property contains toxic substance spills, heavy metals, pesticides, radon, or has ever been a landfill site. If your home is close to environmental contaminants, such as farms that use pesticides or factories with hazardous wastes, you may need to disclose that fact.
4. Death or Violent Crime Disclosure
When it comes to the tough subject of disclosing death in the home, follow the guidelines set by your state. Though most states don’t have a disclosure requirement, some states require sellers to confirm whether any type of death happened in the home, while other states only require disclosure of past suicides or violent crimes. Similarly, other states may require you to disclose past suicides or violent crimes within one or three years of the event.
Even if your state doesn’t require disclosure of a death, it might be worth erring on the side of caution and being forthcoming about it with potential buyers. That way, you avoid accusations of negligence down the road and build a trusting relationship with your buyer.
5. Property Liens
Make sure your prospective buyer knows of any property liens on your home. This legal debt means you must acquire permission from your lien holder before you can sell your home. Once you’ve sought permission and it’s accepted, you must disclose the details of the lien to the buyer.
You must disclose this information to prevent the new homeowner from losing the house for not paying the debt off. If you have a property lien, it’s a good idea to pay off the debt before selling the home. Buyers tend to be wary of investing in these kinds of high-risk purchases.
6. Neighborhood Nuisances
There’s nothing worse than moving to a new place and discovering something unsettling about its surroundings. That’s why home sellers typically have to disclose any nuisances around the property that could bother or harm new occupants.
While these disclosures vary by state, some designated “nuisances” include landfills, farms, airports, shooting ranges, and any nearby business—commercial, industry, or military—that may produce noises, odors, or smoke.
7. Governance by a Homeowner’s Association
If your home falls under the purview of a homeowners association (HOA), you need to disclose that information and its bylaws to potential buyers.
Participation in a homeowner’s or neighborhood association often means annual or monthly fees, as well as rules that might be prohibitive to changes a home buyer may want to make. Some associations prohibit you from constructing a community garden, owning chickens, or growing a native landscape design. Since these details factor into a buyer’s decision to purchase a house, you’ll need to give them the full rundown of HOA or NA information.
8. Other Possible Disclosures
Along with the primary disclosures listed above, you should also provide your buyer with any additional information about the property that may be helpful to know.
Remember that a seller’s disclosure is designed to inform prospective buyers of pertinent information that could negatively impact their decision to purchase your home. If there’s a small inconvenience with your home, like a broken sidewalk or a particularly noisy neighbor, that’s an element to disclose. You can also point out self-made repairs that you made to the home.
You’ll also want to let the buyer know if your home is considered a historic property or located in a designated historic district because it may affect what kind of exterior alterations or repairs the new homeowner can make.
What Is the Caveat Emptor Rule?
While most states require seller’s disclosures, other states use the caveat emptor rule that places the burden and responsibility on potential buyers to closely examine the home for issues. The phrase means “let the buyer beware,” and it pushes buyers to perform their due diligence in determining the type of information typically provided by seller’s disclosures. States like Virginia, Alabama, Arkansas, Georgia, North Dakota, and Wyoming follow the caveat emptor rule.
When Should You Disclose Important Information?
You know what they say: Honesty is the best policy. While you don’t want to wait until the last minute to disclose important information to your buyer, it’s a good idea to provide the seller’s disclosure once a buyer makes an offer.
Keep in mind that, while some states require homeowners to give the seller’s disclosure before the buyer makes an offer, many states vary on when you should release your seller’s disclosure to buyers. Generally speaking, most states require you to release the information after you’ve received an offer, especially if you’ve received multiple offers on your house.