What Are Sellers Required to Disclose Before a Home Sale?

When sellers are assessing their properties for sale, they may wonder what they need to disclose to the buyers. From flooding to mold, all homes hide their fair share of secrets, and sellers may not always be eager to confess it all. However, trying to hide the uglier parts of the structure can end up being a legal mistake that can cost a seller dearly. Learn more about the rules of disclosure, and why sellers are encouraged to tell it like it is.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

The State of the Matter

What a seller has to disclose is dependent upon the state in which the property is located. However, most states will break down the categories into different types of hazardous conditions. This includes things like outdated wiring, termite damage, lead paint, or asbestos. Even if the seller believes the flaw to have been eradicated from the home, they're typically still required to disclose the information to the prospective buyer.

So if the basement was recently restored from water damage, sellers are required to not only tell the buyer, but also provide proof of the repairs. Any other structural deficiencies or location concerns (e.g., the home is located directly over an earthquake fault, etc.) will also need to be disclosed.

When to Disclose

Sellers can confuse the point of the inspection with their legal responsibility. A home inspection is meant to give buyers a cohesive picture of the condition of the property—it is not meant to serve as a substitute for seller disclosure. In other words, if a buyer sues the seller for misrepresenting their home, the inspection may not be admissible in the seller's defense. Real estate agents usually encourage their clients to write down all the facts of the home, whether it's required or not.

Legal Hot Water

Seller disclosure is one of the more complicated parts of the home sale. The onus is on the buyer to prove their case if they later discover a fatal flaw in the home. The buyer will have to convince a legal official that the flaw existed before the time of the sale, that the seller knew about the flaw at the time of sale, and that the seller explicitly lied or omitted the flaw. As sellers might imagine, this can be difficult to do.

But despite these facts, it's still better to be honest. For one, the real estate agent for the buyer will instantly warn their clients of a home with no (or very few) disclosed flaws. And even if a buyer can't prove their case against the seller, they can still tie up the seller's time, money, and energy with a lawsuit.

When to Sell As-Is

For homes that may have a lot of structural damage or hazardous conditions, it is possible to sell the home as-is:

• Disclosure: Sellers still have to be upfront about the state of their home with an as-is property. They may not be required to go over all flaws with the buyer (again, rules vary by state), but sellers are required to be honest when asked directly about the house.
• Repairs: With an as-is home, sellers are not required to make any repairs—regardless of the severity of the condition.

As-is homes will typically attract flippers rather than homebuyers, and the price may be significantly less than its potential market value. Still, some sellers just don't have the energy to negotiate with buyers about the cost to replace the furnace or repair the septic tank.

Disclosure for Durango home sellers can be a dangerous game, especially if the seller wants to gloss over a few of the more complicated details. Ultimately, the choice is up to the seller, but they should be aware of the consequences of keeping quiet.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.