Seller’s Disclosures: A Quick Guide

Buying a home implies a certain amount of risk. What if your supposed dream property turns out to be a money pit? 

Thankfully, there are laws in place to prevent this type of situation, stipulating sellers must inform buyers in writing of certain issues with a property. This document is called a seller’s disclosure. 

And while this document might be of utmost importance to buyers, it’s also essential that sellers understand its ins and outs. If you’re a seller and don’t fill out this paperwork correctly, you could find yourself in legal trouble.

It’s smart to get professional help from your realtor creating this document (if you’re a seller) or reviewing it (if you’re a buyer). But you can read up on the basics and head into your real estate transaction informed. Here’s a quick guide to seller’s disclosures and what they generally contain.  

What is a seller’s disclosure? 

A seller’s disclosure is a document that states known issues with a property. The issues cited are flaws that could negatively impact the liveability or value of the home. 

Seller’s disclosures are generally yes/no forms on which a homeowner honestly answers questions about the state of their property to the best of their ability. The issues on a seller’s disclosure form range from damage, potential dangers, and facts (like a death in the property) that could present a barrier for some buyers. 

But what exactly is on a seller’s disclosure statement varies by state, with some local laws demanding more specificity than others. Certain states don’t even legally require a seller’s disclosure. Nonetheless, if you’re a home seller in one of those states (i.e., Arkansas), your real estate agent may still recommend that you provide one. It’s wise to tackle this topic directly with your realtor, who is an excellent source of information and can provide you with detailed information on how this process runs in your geographical area.

What’s typically on a seller’s disclosure? 

While the content of a seller’s disclosure ranges based on factors like where you live and your agent’s recommendations, the information generally falls into a few categories. Here are some of the common ones.

Repairs 

Some seller’s disclosures include a repair history detailing major fixes done to the home. Significant repairs imply the previous existence of big issues with the property that, while controlled for now, could arise again. A future owner may have to re-repair these aspects of the property or at least perform maintenance to ensure that repaired areas don’t worsen. Disclosing this information helps the buyer understand the time and money keeping up with the repair could imply.

Hazards

Seller’s disclosures about hazards help a buyer make an informed decision about purchasing a home that implies certain risks to their health and well-being. Sellers may need to make a seller aware of: 

• Water damage

• Foundational issues 

• Pests (like a termite infestation)

• Faulty electrical and plumbing installations 

• Asbestos

• The existence of fuel tanks

• Radon

• Lead paint

• Climate-related dangers (like flood risks)

• The existence of holes/pits that could affect the stability of the home

• Historical data, like whether there has ever been a landfill on the property 

• Geographical data, like if the home is in a seismic zone

Death in the home

Some buyers are uncomfortable living in a home where someone has died, but most states don’t require that sellers state this fact. Those that do have rules defining whether the seller must disclose a death based on how long ago it happened and the nature of the incident. This said, even if a seller isn’t required to offer this information, a real estate agent is if a buyer asks. 

Home Owners Association (HOA) information

Buyers will want to know if a property is governed by a homeowners association (HOA) as this implies fees and limits (i.e., on what cosmetic changes someone can make to a property). A homeowners association also provides perks, like maintaining shared spaces and ensuring neighbors respect one another. Whether viewed as a pro or a con, this fact is something a potential buyer should know before signing on to a property.

Neighborhood nuisances 

Neighborhood noise can keep a homeowner up at night—literally. And odors from nearby industries can make life uncomfortable, too. A neighborhood nuisance disclosure makes buyers aware of nearby airports, farms, military bases, landfills, shooting ranges, and more.  

Liens 

A lien is a type of debt collateral in which a lender may take a homeowner’s property if they fail to repay. Should a home on the market have a lien on it, the property cannot be freely transferred without the lien holder’s permission. Getting that green light could pose a setback for an interested buyer. And not knowing about a lien could cause disastrous problems, like the new homeowner losing their property due to someone else’s unpaid debt.

Items that don’t come with the sale 

A buyer may fall in love with a home’s high-end appliances or trendy new light fixtures only to be sorely disappointed when they move in and those items are no longer in the property. A seller should disclose if they’ll be taking items that might normally come with a home so there’s no confusion or hard feelings post-sale.

Seller’s disclosure vs. the caveat emptor rule

Not all states have seller’s disclosure requirements; some use the caveat emptor, a.k.a. “buyer beware,” rule, In this arrangement, it’s the buyer’s responsibility to assess the property’s condition.

Instead of trusting the home is fine as-is, which could be a very risky choice, a buyer will want to get a home inspection so that a professional can uncover issues the untrained eye wouldn’t. The buyer may also want to get a warranty for the home, just in case problems that not even the home inspection found arise. 

Seller’s disclosure: potential consequences

If you’re a seller, not providing accurate seller’s disclosure documents could give a buyer a reason to back out of a sale. Or you could land in legal trouble if the buyer believes you purposely hid issues with your home. It’s wise to have your real estate agent, who is knowledgeable about local disclosure laws, help you prepare this documentation as comprehensively as possible, avoiding an unsavory situation. 

If you’re a buyer, not reading a seller’s disclosures carefully and not researching the data therein (like liens, which are public record), could mean that you end up with a problematic property you’ll have difficulty living in or reselling. 

Have less to disclose by getting your property in top shape

Before putting your home on the market, take advice from a top-notch Titus real estate agent about aesthetic upgrades that could maximize your sale. You’ll make your property more attractive to buyers, and by getting ahead of necessary repairs, you’ll avoid some potential seller’s disclosures.

Titus agents also have exclusive access to a unique financing product for their clients. With a zero-interest closing line of credit (CLoC), you can upgrade your home without paying anything upfront or out-of-pocket. Learn how it works here.