Seller’s Disclosure: What Home Sellers Must Reveal

What is a seller’s disclosure?

A seller’s disclosure is a document that outlines a property’s condition and history, including any known issues or defects. Typically, it’s a series of yes and no questions, with space to provide more information if needed. It’s a legal requirement in most states, though each state may have its own rules about what specifically needs to be disclosed.

“The interesting thing about the seller'’s disclosure is that it is really for the seller’s protection,” said Christa Ross, a realtor with RE/MAX Select Realty in Pittsburgh, Pennsylvania. “Which is the reason they should make every effort to fill it out completely and accurately.”

When and how a seller’s disclosure is provided

If you’re the seller, your real estate agent or mortgage lender will provide you with a disclosure statement, which you’ll fill out. These forms ask specific questions to make it easier for you to remember important information. There should also be blank lines where you can leave additional comments.

If you’re the buyer, you can expect to receive the seller’s disclosure before you sign a binding contract to purchase the home, though how early in the process you receive the disclosure may vary.

What to include in a seller’s disclosure

Regardless of the state where the property you’re selling is located, expect to address the following topics in your disclosure.

Neighborhood activity

Sellers have to disclose a pattern of offensive and harmful activities within the neighborhood. This doesn’t mean the common sound of lawnmowers on the weekend, but more frequent and annoying noises or behaviors near the home. For example, is the house next door frequently the site of loud parties that blast music late at night?

Hazards and environmental factors

You must disclose any known hazards or environmental factors, including whether the home is in a natural disaster zone or if it has mold or lead-based paint.

Property defects and damage

You must disclose any structural issues with the home, as well as electrical or plumbing problems. You’ll also need to disclose termite damage or a history of termites, even if you fumigated the home. You might not be asked to fix any of these issues, but you’ll protect yourself legally by disclosing them.

Homeowners association

Buyers must know if there’s a homeowners association (HOA) for the property and what fees and requirements come with that.

» MORE: Homebuying checklist

Federal vs. state seller’s disclosures

Certain disclosures are required federally by all U.S. sellers, while others are specific to individual states.

Federal seller’s disclosures

These are the most common disclosures you can expect no matter in which state you sell or purchase your home:

• Lead-based paint disclosure: If the home was built before 1978, this informs buyers about the potential presence of lead-based paint. Buyers have the right to get the house tested for lead.
• HOA disclosure: Sellers typically provide information about the association's rules, fees and any pending litigation.
• Property history disclosure: This disclosure covers information such as past renovations, repairs, additions or insurance claims made on the property.
• Environmental hazards disclosure: Sellers need to disclose the known presence of hazardous substances such as asbestos, radon or mold.

State-specific seller’s disclosures

Check your state’s real estate laws to know what else needs to be disclosed. Most state-specific disclosures focus on the state’s unique weather and natural disaster issues.

Here are some examples of how disclosures differ by state:

• California: Sellers are required to answer questions about the home’s proximity to fault lines and if there are any areas of the home that are more susceptible to damage if an earthquake happens.
• Florida: If a Florida property is exposed to coastal damage or beach nourishment, a seller must disclose that along with the fact that certain marine turtles are protected.
• Missouri: The seller must disclose any prior knowledge of methamphetamine production on the property, even if the people involved in the production weren’t convicted.

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Can you trust seller’s disclosures?

Seller’s disclosures may not always be accurate, but this isn’t necessarily due to any maliciousness; the seller might simply not be aware of any issues.

“While it is required for the seller to disclose what they know, I try to remind my buyers that everything on the disclosure should be taken with a grain of salt because there is no guarantee of accuracy,” Ross said.

“It is not all that uncommon for things to break immediately after closing, especially in a home that is vacant and has not been occupied recently. And it is also true that many sellers just really don't know everything about their home or can't recall things that happened in the past.”

A home inspection will prove more valuable than a seller’s disclosure, as it will yield a detailed report on the home’s interior and exterior state.

“The disclosure is so the buyers are presented with everything the seller can tell them about the home, but that doesn't mean they can rely on it in lieu of doing their own due diligence, including a thorough home inspection,” Ross said.

» MORE: What to expect from a home inspection

FAQ

Bottom line

Whether you are the buyer or the seller, a seller’s disclosure is not only a legal requirement, but it can help make your real estate transaction as honest as possible. Sellers don’t have to fix or pay for all issues listed, and buyers should take disclosures at face value and rely on a home inspection for a thorough check.