It’s a common practice in real estate to give a house an extreme makeover before putting it on sale. Sellers spend considerable money to increase the value of the house and make it beautiful inside and out. From sprucing up the landscaping, increasing the square footage, and upgrading the kitchen and bathroom, sellers go through different lengths to make a home look at its absolute best.
Behind all these improvements, some sellers choose to upgrade a house in hopes of hiding something up. These hidden issues range from safety hazards, plumbing leaks, flooding issues, and other structural problems. But nothing escapes the eye of a keen house hunter — they can file for negligent misrepresentation and hire a real estate law service once they found out the seller is hiding something.
Negligent misrepresentation occurs when an agent or seller makes a false statement about a property. In this case, it is the buyer’s job to learn as much information about the property to address potential issues before closing a deal.
When buying property, it’s important to make disclosures an essential part of any real estate transaction. To prevent legal issues in the long run, here’s what you should know about real estate disclosures.
Real estate disclosure laws
Disclosure laws in real estate come in different forms. It allows the buyer to discover important facts about the house and the living situation. Seller disclosures vary from previous repair issues, cost of upkeep, nearby development projects, quality of the neighborhood, and other details associated with the property.
Disclosure documents contain valuable property information and protect the buyer’s interest by acting as evidence from possible legal action. This document provides the seller the chance to expose every little detail about the property, whether it can affect its usefulness, enjoyment, and overall value.
Real estate laws govern disclosure requirements to protect the people involved in a home buying transaction. Revealing any current or potential problems about major home systems, conditions, and components will notify the buyer about possible risks and prevents the seller and agent from any liabilities.
Most states require sellers to fill a disclosure form containing questions that address certain details, such as the condition and the age of a property, water source, structural defects, sewer system, and other damages such as cracked walls or shifting foundations. Disclosure forms may also contain information about previous or current issues. These can be about wood-boring pests (e.g., termites, ants, beetles, and rodents) and problems with mechanical and electrical systems. State and federal laws may also request additional disclosures on separate documents.
Who’s going to fix it?
Disclosure laws do not apply to normal wear and tear. In fact, there’s no need to fix every single defect you disclose. The seller is also not required to perform an investigation to identify possible problems on the property. But it’s important not to speculate from the get-go. A seller should only reveal exactly what they know about the property, nothing more or less than that, to prevent misrepresenting the problem.
Discuss disclosure matters with a real estate agent or attorney to know how disclosure works. Oftentimes, a certain issue is not too serious enough to include on the disclosure form, but you can relay it to the buyer in another fashion.
Still, the more information you reveal, the better and the smoother the transaction will go. Disclosing everything you know will serve as your protection and give the buyer peace of mind. Let potential buyers know what’s in it for them so that they won’t feel cheated even after purchasing the property.
How to make a disclosure
State laws about real estate disclosures may vary and also at county and city levels. The law requires sellers and agents to accomplish and sign a set of documents concerning disclosure statements.
Disclosure often takes the form of boilerplate documents collated by the state or local real estate association. The seller should answer a set of yes/no questions about the property and the living situation.
Also, sellers should submit documented communication between the agent, previous owner, or neighbors about significant items or defects that can negatively affect the property’s value. Depending on the neighborhood, the seller is responsible for whatever they disclose for up to 10 years. If the buyer finds an existing defect that wasn’t included in the disclosure statement, they should consult a real estate attorney to determine the right course of legal action. Hiding something from the property will haunt the seller in the form of a lawsuit.
Real estate fraud is a sad reality. Disclosure cases are a reminder for agents and buyers to verify whatever information a seller provides them. For buyers, don’t accept everything whatever the seller or the agent tells them. Make an effort by conducting a thorough house inspection and get legal advice once they encounter a misrepresentation issue.