What are real estate disclosures? I will preface this by stating I am absolutely not an real estate attorney nor should this be considered legal advice. Disclosures are pieces of information about the property, neighborhood, anything relevant to the enjoyment of the home. These can come in the form of inspections, reports, bids, receipts for work done, agent observations, agent comments and sometimes the neighbors. Seller disclosures are questions asked of the seller to impart everything they know about a property and one disclosure is required by law. As realtors we have great liability with disclosures so there are many approaches to the delivery of disclosures.
When should they be given. I am going to be hung out to dry on this when I say maybe not always right away. It depends, some disclosures are theories. Working with a client I may discover they have not pumped their septic in many years and I suspect the septic will not pass inspection. We are going on the market before we can get the inspections done, so I would wait on my initial theory until a professional has reviewed it. Then disclose the results right away to everyone who has showed interest. Also a disclosure today about a problem could be repaired and still be a disclosure, just not as bad or fear inducing. Waiting until it is fixed may turn it into a non-issue. On the other hand if there are huge, expensive troublesome issues they should be disclosed right up front. Way before a buyer falls in love. Timing is key.
Who should disclose? Sellers first and foremost, agents on either side should disclose and have a fiduciary duty to. But not everyone has a right to decide what should be disclosed. I once had a listing and a neighbor came to the open house and screamed that I should disclose the tenants had a tree taken out. It was years prior and not relevant. He was angry he did not get to weigh in on whether the tree should have been cut down or not. I had a listing where the owner had committed suicide on the property, in California the rule is within three years this is required to be disclosed. The trustees believed the three years had passed so why disclose and I explained that when a neighbor comes calling and they will, this could still be a problem. It is better to just disclose it and get it out there before someone else does. Lastly when a seller divulges all that they know this gives the buyer confidence that the sellers are not hiding anything. I have had sellers call me and say they woke up at two am and remembered a plumbing leak about five years ago. They ask should we disclose it and I always say yes it never hurts, it shows the sellers care about imparting all that they know about their home.
Why are disclosures important? At our price points it is imperative to understand all the facets of the home. Repairs add to the cost of the home. Are there repairs needing to be done today or in the future. What about a large development being constructed nearby. I think if a buyer knows as much as they can about a property it makes homeownership easier. Being a homeowner is costly, maintaining and repairs are always going on. There are stories of wild expensive lawsuits being waged when buyers were not told about issues with a property. Surprises are what make buyers angry and that is when the lawsuits start.
What should be disclosed? Everything just list it all out. I have had sellers say I fixed the faucet five years back and it gets listed but most importantly it big things like water leaks, fence disputes with the neighbor, failing foundations or toxic substances in the home. It is best to disclose as much as possible I suggest a list with as much detail as possible. And as a seller you can only disclose what you know so do not worry about what you don't know.
I have had listings in the past that were not perfect they were wonderful homes with sellers who were happy with the home. But there were issues. Depending on what it is I have added it to the copy the public sees but if it is sensitive I will add it only to the agent comments. This is were a good buyers agent should always look first. Why are some issues hidden? There are many reasons first and foremost this is somebody's home and to publicly advertise there is a problem can upset a seller. Another reason is it maybe a sensitive topic about family or a neighbor will use that against them. For instance a bathroom maybe be added to the home without a permit. Making this public may subject the seller to fines or penalties. This should still be disclosed and or remedied just not but on blast. Open house stalkers love to grill agents on what they have found out and sometimes spout this information to who ever they encounter. This is not right and not fair to the sellers.
I think this is often not talked about by realtors because there is a fear of legal recrimination even talking about disclosures. The point is to always disclose always but there is a proper place and time.