Disclosures are a key part of selling your home. The prospective buyer should have some reasonable assurance that the home they are getting is a valuable one, with no ticking time bombs lurking that will land them with a lot of expensive repairs.
Honesty Is the Best Policy…Always!
Most smart sellers will spruce up their home with a fresh coat of paint and perform minor repairs before they put their home on the market. However, some unscrupulous people will make cosmetic changes with a view to hiding something more serious, in the hope of making the sale and tricking the buyer. We call this a pig with lipstick…a professional can spot some of these things for you.
This is short-sighted, because the house will need to be appraised, and any decent real estate appraiser knows all the tricks. The sale will fall through, and you as a seller will have your reputation dented in the eyes of the realtor trying to work with you to sell your home. Therefore, it’s best to disclose and work out who will repair what, rather than trying to run a scam.
Real Estate Disclosures
Real estate disclosure statements are the buyer’s opportunity to learn as much as they can about the property and the seller’s chance to give an idea of what it will be like to live in that house.
Potential seller disclosures range from knowledge of dry rot or leaky windows, to work done without a permit, to information about a major construction project nearby that might affect the price of housing and the quality of living in that area.
Further, disclosure documents inform buyers and also protect sellers from future legal action. Disclosures are the chance for the seller to reveal anything that can negatively affect the value, usefulness or enjoyment of the home.
Varying Disclosure Laws
Disclosure laws vary from state to state, and in some cases, city and county. Some are stricter than others. In general, disclosure laws require that sellers complete or sign off on a wide range of documents. These will include a Natural Hazards Disclosure Statement, Local and State Transfer Disclosure Statements, Property Disclosure or Disclaimer, and Lead Based Paint disclosures to name a few.
These disclosure documents are usually standard templates that have been written by the local or state real estate association and are most often a series of yes/no questions about the home the seller is putting on the market, and their experience of living there.
Sellers must also present any important documents between neighbors, previous owners, the seller or the agents in reference to any substantial defect or issue that might affect the value of the home.
It is important to be honest about these disclosures because depending on where the seller lives, they might liable for what they disclose, or fail to disclose, for as many as ten years after the sale. Trying to hide something can come back to haunt you long after the sale, and the last thing most sellers want is an expensive and complicated lawsuit.
Disclose previous improvements, renovations or upgrades, and whether the work was done with or without permits, and by which vendors. Other standard disclosures include termites, any history of property line disputes, and defects or malfunctions with major systems or appliances.
Disclosure documents will also ask sellers if there are any liens or judgements on the property. Of course, liens and judgements will be uncovered by the title company/attorney preparing the transfer of title documents. The sooner this information is obtained the better chance it can be cleared up allowing settlement to happen on time.
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