Sometimes, it seems that buying and selling property has a whole language of its own you need to know and understand before venturing into the market. One such term would be “seller’s disclosure.” What are they and how can they impact on you and your transaction?
Buyers and sellers are both affected by this key component of the real estate deal. Whether you’re buying or selling, you should know these facts about the seller’s disclosures.
A seller is always going into a sale intending to present their property in the best possible light. Most homes will be looking great, clean and freshly painted before they hit the market. But sometimes, all is not what it seems and a seller may be trying to pull the wool over an unwary buyer’s eyes.
The seller’s disclosure
In most parts of the country, a seller’s disclosure is required by law. Ideally, this statement from the seller will show a more complete picture of the property.
As the prospective buyer of a home in Texas, you no doubt want to know how much the seller is obligated to tell you about the place. Luckily, Texas law requires sellers to give buyers a written statement with information confirming what the seller knows about the property’s condition.
How a disclosure is made
The seller is likely to meet this obligation by filling out what’s known as a Seller’s Disclosure of Property Condition. This statement typically comes in the form of a boilerplate document –available from the local or state real estate association.
The seller must answer every question in this disclosure. If any part is left blank, the buyer should request the seller complete the form. The seller’s agents are not allowed to fill the form for clients – it must be done by the seller.
As the disclosure gets attached to the contract, it is important that the seller complete it fully. This isn’t the time to conceal anything – this disclosure can protect the seller from future legal action. This must be properly dated and signed in order for it to be legally binding.
When the seller gives the disclosure
Smart sellers let the customers know everything they need to know up front – before an offer – by providing full disclosure. This makes a property more appealing, adding layer of transparency to the sale and saves everyone the hassle and expense of a deal falling apart in escrow.
In most case, the disclosure statement is given to buyers once the seller has accepted their offer. In addition to a loan or inspection contingency, the buyer has a chance to assess the seller’s disclosures. If something bad about the property comes to light through disclosure, they can usually back out.
The buyer’s responsibility
When the buyer receives the disclosure statements, the first and most important step is to thoroughly read the seller’s description of the property features, explaining any conditions, hazards or flaws. Items or issues the buyer needs to investigate further should show up with careful reading of the disclosure form.
Buyers must sign off on all disclosures and reports so review them carefully and get the answers to any questions that arise. Cross check the seller’s disclosures with the municipality and the city building permit and zoning reports.
Examples of items in a disclosure
Seller’s disclosure statements can reveal information about previous improvements or upgrades and whether the work was done with or without permits. The disclosure may tell you about a leaking window, but a standard disclosure can also include the following:
- Termite problems
- History of property line disputes
- Existence of pets
- Neighborhood problems
- Defects with major systems
Any substantial fault or factor that could have an adverse impact on the property’s value should be listed as well. In some parts of the country, the seller can be held accountable for the seller’s disclosure for up to 10 years.