Disclose, Disclose, Disclose
When buying a new car, it’s important to familiarize yourself with the cold, hard facts. What kind of gas mileage will it get? What safety ratings did it earn?
Purchasing a home is no different. Before you make one of the biggest purchase of your life, shouldn’t you do your homework to understand exactly what you’re getting?
Besides property inspections, one of the primary ways of understanding your potential property is through disclosure forms. Let’s explore what makes disclosures so important.
What is a Disclosure?
A disclosure can be virtually anything with a material effect on the property’s value, from an addition that’s not up to code, to nearby church bells within earshot. As a seller, if something comes to mind that you would want to know about the property as a buyer, it’s probably a worthwhile disclosure.
As a buyer, you will typically receive the completed disclosure forms once you make an offer, and it’s critical to review them carefully with your realtor (along with your contract). A smart seller should have already informed you of any significant problems—big revelations discovered via the disclosure forms are a red flag. In fact, when disputed real estate transactions go to court, disclosures are frequently at the center of the conflict.
It might seem as though disclosures are only important for the buyer, but one could argue the opposite is true—it’s the seller who ensures his or her legal protection by honestly and comprehensively disclosing everything they can. In fact, some states allow a buyer to bring legal action against a seller up to 10 years after the sale.
When filling out disclosure forms, state the facts clearly and without qualification. Try to avoid using adjectives that leave room for interpretation and expose you to legal risk—i.e. ”minor landslide repair”, “occasional roof leakage”.
As a seller, it’s fine to not have all the answers if you are thorough in disclosing what you know. For instance, if you’re not positive a recent window repair was up to code, just say so, and include the phone number of the handyman (or track down the information yourself). Be sure to include the source of your information where it may be relevant.
Most of all, never leave a field blank on a disclosure form, as this is a red flag to any experienced buyer.
Disclosing With Non-Contingent Offers
If you’re a buyer making a non-contingent offer, we’d advise you to reconsider—if you make your offer non-contingent on an inspection, for instance, you could be missing out on crucial information about the property.
If you decide to move ahead, you should subject the seller’s disclosure forms to much greater scrutiny. These can provide vital information about the property, and serious omissions can have legal ramifications down the line.
Bear in mind that regardless of your transaction structure, “as is” really means “as disclosed”. Selling a property “as is” in no way absolves the seller’s obligation to faithfully and comprehensively disclose relevant details about the property.
Buyers and sellers alike want a smooth transaction, which necessarily begins with complete and accurate disclosure forms that put everyone on the same page. Painting a clear picture of the property—not a rosy one—Is the best way for both parties to ensure they avoid misunderstanding and don’t rack up legal bills down the line.
We know this is an emotional process for buyers and sellers, and understand how easily excitement can overwhelm a dispassionate view of the facts. Nevertheless, it’s important for buyers and sellers alike to assess the property honestly for a successful transaction for all.