It is always recommended for any consumer seeking to make a large purchase to gather as much information as possible to make an informed and educated decision. This is especially true when purchasing a home. There are several federal and state laws that require the seller to provide essential information to the buyer, including a property disclosure statement. This is a legally binding document that states that a seller must divulge about any known issues, either past or present.
The property disclosure statement is critical in a real estate transaction. It involves issues the seller of the property may or may not be aware of. Most states have their own real estate laws concerning property disclosures. In fact, some individual counties have their own rules. There are a few states that do not require a seller to provide a property disclosure statement to a buyer, but most do. States that do require it most likely have certain exceptions.
What is Included in a Property Disclosure Statement?
It is important to know what the federal government requires a seller to disclose when selling a property:
- If a house is built before 1978, federal law states that the seller must disclose to the buyer the possibility of lead-based paint or similar issues in the home.
- A seller must also allow the buyer 10 days to test if lead is present in the house.
- A buyer will also receive signed statements from both parties acknowledging what is being disclosed.
- The buyer will receive an Environmental Protection Agency (EPA) pamphlet about the dangers of lead in a home.
Each state will provide a seller a checklist that gives them the opportunity to report certain information about the property; this is the property disclosure statement. Each city and county have their own real estate associations and some may be strict.
The following are just some of the myriad of examples of what a seller must disclose to a potential buyer:
- Any renovations or improvements that have been made while under the ownership of the seller. This allows buyers to cross reference the information with the county’s laws and if the repairs had been done legally and up to code.
- Any environmental hazards that are known or could potentially be a problem. This includes flooding, local construction, nearby factories, or the possibility of wildfires.
- Any structural issues, such as a weak foundation or termite damage. A seller should also disclose of any mold issues or any insect infestations.
- House issues, such as appliance problems, HVAC problems, and window issues. A seller might also have to report if or when an appliance had been replaced.
Some state real estate associations require sellers to report noise levels, any police activity, and sexual offenders living nearby. There is also the possibility of a homeowners association fee.
What Happens After Receiving the Property Disclosure Statement?
Most states require the seller to provide the property disclosure statement after the buyer’s offer has been accepted. The buyer must then authorize that they received the statement and have reviewed it. More than likely, the transaction will move further into negotiations.
The purpose of the disclosure statement is to allow a potential buyer the ability to either cancel the sale or possibly renegotiate a price if there are negatives found on the statement. The seller will often be penalized if they do not provide the statement or have done so dishonestly. Some states will also punish the real estate agent if they did not disclose certain information as well.
The property disclosure statement only asks questions to verify what the seller knows, so there is a possibility that problems may arise after the home is purchased. This is more than enough reason for the seller and the buyer to hire a third-party inspector to look at the home and focus what is on the disclosure statement among other items. This inspector can also verify the issues on the statement or can also find what is not on the statement.
The third-party inspection is important to both the seller and buyer for different reasons. It helps give the buyer a more educated decision while the seller can use the inspection as a reference if needing to adjust the value or if repairs need to be made. Either way, if any issues come up with a property disclosure statement, it is important to discuss it with a real estate agent or a knowledgeable real estate lawyer. A skilled lawyer can help their client through the real estate litigation process.
Towson Real Estate Lawyers at Huesman, Jones & Miles, LLC Protect the Rights of Homeowners
Purchasing a home is an important but stressful decision in a person’s life. If you are concerned about issues in a newly purchased or potential home, a Towson real estate lawyer at Huesman, Jones & Miles, LLC can help you. Call us at 443-589-0150 or complete our online form for a free consultation today. Located in Hunt Valley and Towson, Maryland, we proudly serve clients throughout Baltimore, Baltimore County, Bel Air, Bentley Springs, Columbia, Freeland, Hereford, Hampton, Westminster, Essex, Monkton, Sparks Glencoe, Parkton, Phoenix, Pikesville, White Hall, Carroll County, Harford County, and Howard County.