What is a Seller’s Disclosure? Here’s Why It’s Important

Whether you’re buying your first home or preparing to sell, there’s plenty of paperwork involved in a real estate transaction. One important document is the seller’s disclosure, which provides buyers with information about known issues or defects that could affect the property.

Why Is a Seller’s Disclosure Important?

A seller’s disclosure helps protect both buyers and sellers. For buyers, it provides insight into the property’s history and known problems so they can make an informed decision. Disclosed issues may also give buyers an opportunity to negotiate repairs or the purchase price.

For sellers, completing the disclosure honestly and accurately can help protect them from future legal claims related to problems they properly disclosed.

What Is Typically Included?

Disclosure requirements vary by state, but common items may include:

• Structural, electrical, or plumbing repairs
• Water or flood damage
• Environmental hazards such as lead paint, radon, asbestos, or mold
• Neighborhood nuisances, such as excessive noise or odors
• Unpermitted improvements
• Homeowners association information
• Items that will and will not remain with the property
• Certain deaths or crimes associated with the property

Not every state requires the same disclosures, so buyers and sellers should work with a local real estate professional to understand their responsibilities.

Will Every Buyer Receive a Seller’s Disclosure?

Not necessarily. Some transactions, such as foreclosures, certain estate or bankruptcy sales, and some transfers between family members, may be exempt from standard disclosure requirements. In these situations, buyers should take extra care during their due diligence period and thoroughly investigate the property.

What Happens If a Seller Doesn’t Disclose a Known Problem?

If a seller knowingly conceals or fails to disclose a significant issue when disclosure is required, they may face legal consequences, including claims for damages or misrepresentation. When in doubt, sellers should consult their real estate professional about what needs to be disclosed.

Don’t Skip the Home Inspection

A seller’s disclosure is helpful, but it is not a substitute for a professional home inspection. Buyers should have the property inspected by a qualified professional who can identify potential problems that may not be obvious during a showing.

Bottom line: Seller’s disclosures help buyers understand a property’s known history and help sellers meet their legal obligations. Because disclosure requirements vary, working with an experienced local real estate professional can help make sure you understand what applies to your transaction.