What is a Disclosure Statement?Posted March 31, 2016
When a person takes the plunge to purchase his or her first home, it is an exciting prospect. Looking at properties, floor plans, neighborhoods, paint colors, and more is fun for many people. The other side of purchasing a new home is the “business” side of things such as qualifying for a mortgage, down payments, appraisals, escrow, and the many, many, many different pages and forms that must be filled out and signed. One of these forms to be aware of is the disclosure statement.
What is a disclosure statement?
A disclosure statement is a statement that the seller of a property must give to the buyer of a property that outlines any knowledge he or she has about the home of which the buyer should be made aware. This way the buyer can learn as much as possible about the property before deciding to buy or not. Leaky windows, roof needing repair, obnoxious neighbors, and anything else that might affect the value or enjoyment of the property.
Covering your bases
A disclosure statement protects buyers but it also protects sellers from potential lawsuits. If a seller disclosed any knowledge of a potential problem with the property and the buyer purchases anyway, the seller is not liable for that problem. HOWEVER, if a problem arises and it can be proven that the seller had knowledge and didn’t disclose a problem that must have been disclosed by law, the seller can be liable.
What should be disclosed?
The requirements for disclosures vary by state but common disclosures include but are not limited to
- Termite problems
- Additions or remodel work and any permits that were required
- Defects of any appliances or heat and air systems
- Property line disputes
- Liens on the property
- Death on the property
- Water/Leak issues
If I have an inspection, do I need a disclosure statement?
Yes. Inspections may uncover an issue that the seller is unaware of and would not be on a disclosure statement but a disclosure statement may include an issue that isn’t seen in an inspection. While the two may intersect, they are exclusive of one another and both should be included in a real estate transaction.
When is the disclosure statement given?
Usually the disclosure statement is given to the buyer after the seller has accepted an offer to purchase the property. The buyer usually has the right to look over the statement and back out of the deal without penalties if the disclosure statement includes something they are unwilling to accept.
For a consultation with Foss, San Filippo & Milne, LLC, call (732) 741-2525