Home Disclosure is a mandatory business formality in the domain of property management. The home disclosure statement or document is a critical piece of information issued from the seller to the buyer and holds a lot of importance for both parties, for different reasons. For the buyer, it’s an opportunity to gain maximum information about the real estate property they’re considering purchasing and to learn about the seller’s experience with it. As for the seller, the home disclosure allows them to inform and reveal to the buyer regarding the ins and outs of the property and issues that may affect the well-being, overall experience, and value of the property.
This set of statements/documents safeguards the buyer’s rights and saves the seller from financial and legal consequences in the future- ensuring an ethical business transaction where no one is kept in the dark. There are certain federal laws that apply to every state and require disclosure of certain aspects of the property.
What Information To Include In The Disclosure?
As a seller, an important question to ask yourself would be, “what must I include in the home disclosure document?”
Typically, a standard seller disclosure includes everything from information related to a leaky ceiling, molded bathrooms, a DIY repair you did in the kitchen without a permit, renovations to a major construction project executed within the house. It may also include some grumpy neighbors that you can hear screaming every once in a while. As a seller, if you find yourself confused as to what you must include and what you don’t have to, then the rule of thumb is to mention everything you feel you shouldn’t mention.
For a fair business transaction in good faith, it’s recommended to be honest about everything, whether there is sewage dysfunction, a history of disputes in the property, or anything that may directly or indirectly affect the buyer in the future.
The idea is to stay transparent before the buyer and make everything clear before the purchase to know what they’re signing up for.
What Happens When An Issue, Not Mentioned In The Disclosure, Comes Up?
Later after moving in, if the buyer discovers an issue that wasn’t mentioned anywhere in the home disclosure contract, there might be two possibilities.
- The seller was never aware of the issue’s existence.
- The seller knew but deliberately chose not to disclose it.
In the first case, it’s totally normal and possible for an issue or a fact to not be within the knowledge of the previous property owner/seller. For example, suppose the house in question is a decades-old property that the previous owner also had bought way later. In that case, the chances are that they’d never know if the house had lead paints and may transfer the property to the new buyer without ever discovering this fact.
If the new owner finds out about this, then there will be no charge upon the seller. In extension to that, the law doesn’t require sellers to run independent inspection about something they’d never know existed.
However, in the second case, many sellers don’t want to go by the rules hoping to get away with it- but they aren’t getting that lucky every time. A seller may hide the presence of molds in the basement in the disclosure and may cover it up with coats of paint, hoping that the buyer will never discover. And if the buyer finds it out, they can drag this unethical seller to the courts and so on.
The Way Forward
There is no room for bad ethics and bad faith in business transactions. Unfortunately, it is a common practice in property management, but if the culprit gets caught, then the law will teach them a good lesson. Therefore, as sellers, the right way is the best way to get things done. Be very clear and crisp about everything that may or may not have gone wrong with your property before the transaction is closed with the buyer.
As for the buyer, it’s always recommended to run an independent inspection from a professional inspector to stay safe from fraudulent sellers and transactions.
For more details and to avail top property management services, contact Sensible Home Management today.