Disclosure

A disclosure document can be important for both home buyers and sellers. When an owner sells a property, they are typically required to disclose information in a written document.

The requirements vary based on state and local laws.

In general, a disclosure document is supposed to provide details about a property’s condition that might negatively affect its value. Sellers who willfully conceal information can be sued and potentially convicted of a crime. Selling a property “As Is” will usually not exempt a seller from disclosures.

Disclosure rules can affect anyone selling a home, but they’re especially likely to affect property flippers, who buy properties in order to upgrade them and resell them for a quick profit. Property flippers often deal with properties in poor condition.

Also called a property disclosure statement, this is a legally binding document that involves the buyers and sellers. The seller lists anything they know about the property that might impact the buyer’s use and/or enjoyment of the property later on — especially anything that might cost them significant amounts of money. This might include flaws or age-related issues to household systems, like water damage, paint hazards, or construction. It should include information on liens and judgments. The real estate agent is typically required to disclose relevant fiduciary information, such as conflicts of interest and any “urgent need” to sell.

It might include notes on neighborly disputes, as well as events that would stigmatize the property or neighboring property. Pest problems also should be listed on a disclosure statement. Even notes on pets that lived on the property could be disclosed, especially if there were incidents with neighbors or Animal Control.