Every house has its quirks and, as the homeowner, you’ve probably come to embrace them over the years. But, if you’ve started to worry about them once you started thinking about selling, you’re not alone. Many sellers are apprehensive about disclosing any potential problems with the property that could make it harder to find a buyer. However, that begs the question, how much do you have to tell and what can you keep under wraps?
With that in mind, I’ve decided to lay out a primer on disclosures. Keep reading to learn all about what you may have to share with buyers when you go to sell your home.
Federally-required disclosures
Surprisingly, there aren’t a ton of federally-required disclosures out there. However, the one disclosure requirement that is the same in all 50 states has to do with lead-based paint. If your home was built prior to 1978, you must comply with the Residential Lead-Based Paint Hazard Reduction Act of 1992, which is also known as Title X.
Title X states that you must:
- Disclose if there is any known lead-based paint in the home
- Provide buyers with a pamphlet on lead-based paint that was published by the EPA
- Have the buyer sign a statement saying that these disclosure requirements were completed
- Keep the signed statements for three years as proof of compliance
- Offer the buyers a 10-day opportunity to test the home for lead.
State disclosure laws
Other than lead-based paint, the majority of disclosures are regulated at a state level. For the most part, the consensus is that the sellers must disclose any known deficits or problems with the property. However, each state has its own requirements regarding what specific deficits must be mentioned.
Your real estate agent will likely take care of letting you know what the requirements are in your state. Typically, when you put your home on the market, you’re required to fill out a signed disclosure form that asks more in-depth questions about the condition of specific features of your home.
That said, there are a few disclosure areas that are more commonly required than others. They are:
- Water damage or mold: If your basement floods when it rains or your roof leaks, you generally have to be upfront about that. This would fall under the “known deficits” category. Additionally, if you’ve done anything to remedy these issues, you should also be upfront about that.
- Pests: Pests aren’t a pleasant topic to talk about, but it has to be done. If you’ve ever had an infestation – and especially if you have an active one while you’re selling – you need to be open about it. Again, any treatments that you’ve done to remedy the issue should also be brought up.
- Repairs and insurance claims: Buyers can request a CLUE Report, which allows them to see any insurance claims that have been made on the property within the last seven years. Rather than being caught in the lurch, it’s best to simply disclose these issues from the get-go. Major repairs to the property, even ones that were done by previous owners, also fall under this category.
When in doubt, disclose
Most sellers feel apprehensive about the idea of being open about any problems that could potentially discourage buyers from making an offer. However, in this case, it behooves you to be honest. Many of the problems listed on disclosure forms can be found if the buyer elects to do a home inspection. At that point, you’d have to negotiate a remedy anyway.
But, beyond that, purposely withholding information about the property’s deficits can get you into some hot water. There have been lawsuits over these issues and sellers have been made to pay buyers damages because they weren’t forthcoming about this information.
You can always ask your real estate agent if you’re unsure whether or not it’s important to disclose a particular issue. However, as a rule of thumb, it’s better to disclose everything you’re aware of rather than running the risk of having it come back to haunt you later on down the road.