Seller's Disclosure: What to Disclose Selling Real Estate

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Disclosure in Real Estate: What to Disclose When Selling a House

You may not know about a seller’s disclosure when you have never sold a house.

Did you know that real estate disclosure laws vary from state to state? What a seller has to disclose in one state might be completely different than in another.

When selling a home, one of the first discussions with an agent should be about real estate disclosure.

If you are like most home sellers, you know of one or more present issues with your home that could impact the sale price. Every seller must balance wanting to make money off the house with disclosing known issues.

Sometimes there is a balancing act that can be surprisingly difficult. Over the years, many owners have asked me, “What do I have to disclose when selling my house?”

You do not have to be dishonest to worry that listing every little problem may make the sale harder. Like every home seller, you must determine what is essential to disclose – legally mandated – and what you can avoid discussing unless you have to.

What you must disclose when selling a house depends on your state. Some states are more stringent than others when it comes to revealing issues.

For example, in Massachusetts, home sellers are not required to disclose known problems with a home unless asked a direct question by a buyer. This is called “Caveat Emptor” or “let the buyer beware.”

The term let the buyer beware means the buyer assumes the purchase risk. It might fail to meet expectations or have defects.

Understanding Seller’s Disclosure in Your State

However, disclosure laws in Massachusetts differ significantly for a real estate agent. Realtors MUST disclose any known problems with a home. Finding out your state’s real estate disclosure laws will be critical to your sale. Knowing disclosure laws is something you should be aware of right away from your real estate agent.

Some sellers mistakenly believe that selling a home as-is relieves them from being honest with prospective buyers. This is not the case and could easily cause an unnecessary lawsuit.

I also believe that just because something is legal isn’t ethical. I would want to know if I was purchasing a home that had a basement that flooded every spring or had mold in the attic at one time.

If a buyer doesn’t ask the question, it is perfectly legal for a Massachusetts seller not to disclose these facts. Concealment of problems when selling a home, however, is not wise.

Folks, understanding disclosure laws in your state, whether you are a buyer or a seller, is paramount. Lawsuits are brought every week because of non-disclosure of problems in homes. What to tell a buyer when selling a home is not to be taken lightly.

What is a Seller’s Disclosure?

A seller’s disclosure is what a seller knows to the best of their knowledge about the property. It encompasses not only the house but the land and neighborhood as well. A seller’s disclosure is commonplace in real estate sales.

What is a Seller’s Disclosure Form?

A seller’s disclosure statement is a document whereby a home seller discloses what they know and don’t know about their property.

In some states, sellers disclosure’s are mandatory, and in others are not. In Massachusetts sellers, disclosure statements are encouraged but not required.

A disclosure statement will include numerous questions sellers answer about their home. Seller’s disclosure forms will have information on the history of ownership to zoning to the condition of the inside and outside of the property.

Real Estate agents typically encourage sellers to be as detailed as possible.

The seller's disclosure form can be a helpful guide in educating buyers about the property from the owner's experience living there.Click To Tweet

Real Estate Attorneys May Suggest Not Filling Out a Seller’s Disclosure

Some attorneys recommend that sellers not fill out a real estate disclosure if their state does not require it. The argument for non-disclosure is not giving away what could be considered detrimental information.

Whether or not a seller’s disclosure statement is filled out or not a seller and Realtor must always be honest when questioned by buyers.

In states where disclosure is required, the standard could impact a buyer’s decision to purchase or materially affect the home’s value.

In summary, the seller’s disclosure statement gives potential buyers an overview of the property and its history. It lets them be more informed about whether or not to invest in it – with all its defects.

For sellers, this document can safeguard against future lawsuits from purchasers following the completion of their transaction, offering peace of mind that their interests will be protected.

What Does The Seller’s Disclosure Form Contain?

While seller’s property disclosure forms will vary in format, they usually include the following information:

The owner’s name and current address if not living in the residence.
The history of ownership, including when the owner purchased.
Any known easements or zoning issues.
A listing of the specific problems the homeowner is disclosing.
The seller must answer numerous questions about the property with yes, no, or unknown.
Space to explain issues further, including if they were fixed and when.
A list of appliances that will be included with the property.
Space to provide additional disclosures not listed in the document.

Understanding Real Estate Disclosure

A solid grip on disclosure in real estate is essential whether you are a buyer, seller, or real estate agent.

Wherever your home is located, the chances are that laws exist about what must be disclosed when selling a home. Typically, these laws require that any significant defect be disclosed to the buyer before completing your transaction.

Laws can vary from state to state, so you need to ask your Realtor or determine the rules in your area.

When people ask what disclosures relate to real estate, they speak out about things that could impact a buyer’s decision to purchase.

Real Estate Disclosure Forms Are Customary in Most States

A verbal disclosure is usually enough to meet your legal requirements, but in some states – like California – you have to draft a real estate disclosure form that lists various defects.

Your Realtor should know whether or not you need to give a disclosure form to buyers before you finalize your sale.

A seller’s statement of property condition in Massachusetts is not mandatory but has become a standard practice in real estate transactions.

Real Estate disclosure forms protect both a home seller and a real estate agent from a buyer suing, saying they were never informed about some material fact about the home.

A Pre-Sale Inspection Could Help

Many sellers get a pre-sale home inspection before selling their homes. While it may seem unnecessary – since the buyers will be doing their review – getting your assessment as a seller can make things easier.

The home inspector may turn up some issues you were unaware of.

This can be frustrating, but it also ensures that you can make repairs as necessary and disclose all significant problems. As long as you communicate, you should be protected from lawsuits should the buyer discover a problem after closing.

Getting ready for the buyer’s home inspection is just plain smart. With the home inspection being one of the biggest hurdles to clear in a real estate transaction, it is prudent to do so. More home sales fall apart due to a home inspection than any other reason.

Real Estate Disclosure Can Relieve Stress and Simplify The Sale

If you are working with a reputable Realtor, they will emphasize the importance of disclosure. Being honest about what you are selling protects you legally and encourages trust on the part of buyers.

No home is without problems, so a buyer’s agent will be naturally suspicious if you try to pass your house off as trouble-free. Clearing the air about big problems lets the buyer make an informed decision. If the buyer wants the house with the existing issues, you can feel confident they want the home.

Focus On Significant Issues in The Seller’s Property Disclosure

Buyers need to know about major problems, not every imperfection in your home. You may have noticed that a tile in the bathroom was crooked or that one cabinet is not quite square. Don’t confuse buyers with these little things.

If you think the item is something the customer will ask to be fixed after the home inspection, list it in your real estate disclosure form.

When it’s disclosed up-front, it is much harder for a buyer to ask for repairs or a seller concession after a home inspection.

Filling out the seller’s property disclosure can help prevent you from fixing problems after the inspection. It is challenging for a buyer to ask for repairs or credits on something they already knew about before writing an offer.

Taking the time to be detailed with the real estate disclosure forms can save you money.

Seller’s Disclosure: Things To Disclose

The ground rules for disclosure are to notify the buyer of any significant physical issues with the home. Anything that will be expensive to replace or make the home dangerous or unlivable should indeed be disclosed. Disclosure laws also apply to things in proximity to the property as well.

It would help if you discussed with your real estate agent which items should be on a seller’s disclosure form.

Keep reading, and you will find a comprehensive list of what you may or may not have to disclose when selling a house:

Haunted Homes

Some states require disclosure of haunted homes or paranormal activity, and others do not. Issues of haunting or the supernatural are referred to as stigmatized properties.

Finding out whether disclosure of mysterious things happening in and around your home is something that needs to be disclosed is paramount.

Some buyers don’t believe in ghosts or other types of demonic entities. On the other hand, some buyers would not come near a haunted home if their life depended on it. They believe ghosts are real, and you won’t be able to convince them otherwise.

Murder & Deaths on The Property

Some areas require you to disclose any deaths on the property in a certain number of years.

You may not have to disclose this information depending on your home’s location, so check the laws. Buying a house where a death took place recently is something that makes quite a few buyers uncomfortable.

Home disclosures such as this are often not revealed in states where it is not required. It makes sense as to who would want to openly discuss a subject like this that will turn many people away.

If you’re buying a home, here is how to find out if someone died in the house.

Roof Leaks or Needs to be Replaced

Replacing a roof is expensive, and a rotten roof can quickly make a home uninhabitable. Most buyers will want to know the roof’s age so that you will get asked questions about the roof anyway.

Most of the time, there are signs a roof needs replacement, especially if a home inspector is looking over the home.

Foundation Cracks, Sinking, and Other Issues

It takes a lot of effort and expense to repair a foundation with major structural problems. If the foundation is in bad enough shape, it can make the home unsafe.

Everything else rests on top of the foundation, so buyers want a home with a foundation in good repair. If you have known problems with your foundation, having this real estate disclosure upfront would be wise. These are things that can be listed on the property disclosure form.

Lead-Based Paint is a Mandatory Seller’s Disclosure

Federal law requires anyone selling a home built before 1978 to disclose all information about lead-based paint in the house. Both buyers and sellers need to understand the lead paint law.

This law is referred to as the Residential Lead-Based Paint Hazard Reduction Act of 1992 ( U.S. Code § 4852d), which is also known as Title X. There are multiple requirements under the law, including:

Disclosing all known lead-based paint and hazards in the home.
Real Estate agents must give buyers a pamphlet prepared by the U.S. Environmental Protection Agency (EPA) called Protect Your Family from Lead in Your Home.
You must include warning language about lead paint in the contract and signed statements from all parties verifying that all requirements were completed. In Massachusetts, this is referred to as a property transfer notification certification. This is executed by the seller, buyer, and respective real estate agents.
The lead paint acknowledgment must accompany the offer to purchase real estate.
You must give buyers a ten-day opportunity to test the house for lead.
You must keep signed acknowledgments for at least three years as proof of compliance.

Lead paint is a mandatory disclosure in all states. If you fail to comply with lead paint disclosure requirements, the buyer can sue you for triple the damages. This is part of what’s known as Chapter 93A. Accuracy on lead paint is one of the most necessary disclosures for any seller.

Known Toxic Materials in The Home

Some things can be considered hazardous to one’s health found in a home. If a seller knows one of these issues, they should be disclosed to a buyer. None of these are disclosures in real estate that you’ll want to mess around with.

Radon – Radon is a toxic gas from the ground suspected of causing cancer over years of exposure.

Asbestos is a toxic material that can be extremely dangerous when found in the air. Asbestos is often found in older homes as insulation of pipes in the basement. It is also found in vinyl flooring and tiles as well.

Urea Formaldehyde – Formaldehyde was used as an insulating product many years ago, so that it can be found in older homes. It has been determined that this product’s toxicity dissipates over the years, so it is probably not a health hazard anymore. If you know it exists, it would be wise to disclose it.

Mold – selling a home with mold is at the forefront of the real estate industry right now. There is a lot of misinformation out there when it comes to mold. One thing that most people don’t realize is that every home has mold. There are, however, different types of mold. Some molds are toxic and hazardous to one’s health. Common household mold is not. I would highly recommend disclosure if you know of toxic black mold in your home known as Stachybotrys. It should be disclosed even if you have done mold remediation in your home.

Water Damage

Water damage is typical in homes. It is also one of the problems that homeowners try to conceal more than any other issue. Don’t do it!

When water comes into a home, it can easily lead to mold in the future. You should make sure when selling a home to disclose any water problems, whether a flooding basement or an ice dam was fixed. If water has entered the building, declare it!

Off-Site Hazards as a Real Estate Disclosure

If any off-site conditions, such as waste, toxicity, or other contaminants, are present, they could impact the property value. Issues that affect the value or marketability of a property should be included in a seller’s disclosure.

A hazardous waste site in my neck of the woods, Nyanza, in Ashland, Massachusetts. Nyanza was a company that manufactured dyes and pigments. For years they dumped these toxic materials in the ground, contaminating much of the plant’s area. As a result, quite a few people got cancer and died.

Nyanza was in operation until 1978. The contaminated land would remain untouched for another seven years until the EPA gave it Superfund status. The site was named one of the ten most toxic sites in the country. The soil and water in and around the Nyanza site were a horrid concoction of hazardous waste.

This kind of hazard is something that should be disclosed to potential buyers. It should be put in writing in the real estate disclosure.

Natural Hazards Should Be Part of a Seller’s Disclosure

In some states, it is required to disclose if the home is in an earthquake zone, a flood plain, or if the surrounding area is susceptible to wildfires. California, for example, is one such state.

Consult with your Realtor to determine if your area features any of these conditions and if the disclosure is required.

Square Footage of The Home

One of the most contentious areas of disclosure in real estate is the actual size of a home. The square footage of a home is typically published in the multiple listing service for those selling a home.

Unfortunately, the square footage is often wrong. Correctly calculating square footage is critical to understanding. This is an area where real estate agents often rely on the seller to have accurate information.

Quite often, sellers are lax at making sure the size is correct. The square footage of a home is not something that should be taken lightly.

Buyers often place a lot of stock in the square footage regarding the home value. Homeowners and real estate agents should take the time to validate a home’s size to avoid getting sued.

The Number of Bedrooms

The number of bedrooms might seem like an odd disclosure issue on the surface, but it isn’t. In some states, including Massachusetts, you cannot market a home for having more bedrooms than the septic system capacity.

For example, if the septic system is engineered to have the capacity for three bedrooms and you happen to have four in the home, you can’t market the house as a four-bedroom.

Marketing properties for having more bedrooms than the septic system capacity is quite familiar to naive real estate agents who do not know any better.

Repairs or Improvements Made to The Home

Anytime you make repairs to a home, it is wise to disclose them. These should be written into the seller’s disclosure form. Why? Let’s say a problem resurfaces a few years after the buyer purchases the home. If the issue comes back, it will be impossible for the buyer to say they did not know about it.

Sellers should disclose anything that requires a permit in their home. These are usually essential items that should be disclosed. Examples include the heating system, air conditioning, the roof, or anything related to the plumbing or electrical systems.

Seller’s disclosure forms will usually have a question that asks if any work was done to the home that required a building permit.

Legal Issues Should Be Included in The Seller’s Disclosure Form

Disclosing any legal issue that could cloud the title is essential when selling a property. For example, if the home is a short sale and needs third-party approval, it must be revealed.

Another example would be an estate sale. If the home is subject to approval by the estate or probate, buyers should be made aware of this fact.

A few more examples include a cloud on the title or a mechanics lien on the property. A cloud on the title will most likely need to be cleared before selling, so ensure you have it taken care of as soon as possible. By not taking care of such issues, it is likely a closing could be delayed or not happen at all.

Terrible Neighbors

Depending on where you live, there is probably some gray area for what constitutes a lousy neighbor. If, however, you have constantly been fighting with a neighbor because they blare loud music at all hours of the night or have a vicious barking dog.

I would err on the side of caution and disclose this. This is something I have discussed in the past on how to sell a home with awful neighbors.

Sex Offenders

Whether or not you have to disclose a sex offender is not something you should take lightly. The laws on disclosing sex offenders vary from state to state.

Check with a local real estate agent or visit the police department. Either one of these sources should be able to give you an accurate answer. More than likely, you don’t need to have this information in a seller’s disclosure.

Noise Pollution

If you live near an airport, it would be wise to disclose to potential buyers there could be points when things get noisy.

Any loud noises that could influence a buyer from purchasing a home should be disclosed.

Homeowners Associations and Covenants

Disclosing whether there is a homeowners association should be disclosed upfront. There are lots of people who do not want to be governed by various rules.

An HOA could influence a buyer’s purchase in a particular neighborhood, especially when there are HOA fees.

The same can be said of any restrictive covenants placed on a neighborhood. Buyers should have this information up-front to make decisions that will affect them moving forward.

For example, if the neighborhood does not allow you to change the color of your home or let you raise livestock, this should be pointed out before the buyer signs a contract.

Other Miscellaneous Home-Related Real Estate Disclosure Issues

It would be best to consider placing additional items in your seller’s disclosure statement. The seller’s property disclosure should have a category where each potential issue can be disclosed.

Siding problems – If the siding has been peeling away from the house, or if siding issues cause leaks, you should let the buyer know about it.

Window leaks or malfunctions – Windows can wear out like anything else in the home. If there are any significant leaks or other known issues with the windows, they should be disclosed.

Plumbing – Leaks, clogs, old plumbing not up to code – many things can go wrong in the plumbing.

Electrical – Electrical systems are complex and can be dangerous if they malfunction. Repair and replacement are significant problems, so you should say something if you notice issues.

HVAC – Buyers should ask about the age of the heating and air conditioning units, but even if they don’t, you should disclose significant problems you know of.

What Can Happen if The Seller’s Disclosure is Inaccurate?

A buyer could terminate the contract when a home seller willfully misrepresents the property or leaves off pertinent information. If the buyer finds out after the closing, it’s possible a seller could be sued for lack of disclosure.

Final Thoughts on Property Disclosures

As you can see, there are quite a few potential disclosures in the sale of a home. It would help if you determined which items should or should not be disclosed. Again, real estate disclosure laws vary tremendously from state to state.

Be sure to find out how your state treats these issues. In my opinion, you should always err on the side of caution. Most of the time, it is better to disclose than to end up in a nasty lawsuit. It is also an ethical thing to do.

Disclosure in real estate is a complicated subject, so if you have doubts about things you have been told, it may be wise to consult with a local real estate attorney. Ensure your real estate disclosure form is accurate before giving it to your agent.

Other Helpful Home Disclosure Resources

What to know about real estate disclosure forms – see why real estate disclosure forms are so important when selling a house. Understanding property disclosures will help you avoid potential lawsuits.

Use these additional resources to make intelligent decisions when buying or selling a home. Above all else, get educated about disclosure laws in your state!

About the author: The above Real Estate information on seller’s disclosure in real estate sales was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 37+ Years.

Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!

I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.

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