There’s an old adage that what you don’t know won’t hurt you, but when it comes to buying real estate, that’s not the case. After all, wouldn’t you want to know if the dream house you’re buying had flooding problems in the past or has a defective roof?
That’s why full disclosure – a seller’s obligation to disclose facts about properties for sale (such as conditions like occurrence of past floods or structural problems) – is critical when it comes to buying or selling a home. If you’re selling, buyers need to know material facts about your home – that is, anything that could materially affect the sale price or influence a buyer's decision to buy it. And, if you’re buying, as a concerned consumer with a big financial commitment at stake, you want to make an informed decision about what you’re buying.
The National Association of Realtors reports that the major causes of post-sale disputes and lawsuits center around defects and disclosure. But most disputes can be avoided if proper disclosures are made. That’s why most states, including Texas, require some type of formal seller disclosure.
What’s on a disclosure form?
A disclosure form is a notice certain sellers are required to give potential buyers on or before the effective date of a real estate contract for sale, covering in reasonable detail the seller’s awareness of any defects in the property before the sale.
For example, if you’ve had a termite problem in the past, that’s something that prospective buyers should know. Or, if the roof has a leak, buyers need to know that, too.
Attention sellers …
Intentionally withholding information about a property when you sell can have serious legal consequences. Talk to your Realtor and attorney and make sure you understand your disclosure responsibilities. You don’t want to inadvertently leave something out and have to deal with expense, hassles and possible legal consequences later. Also, if you’ve had previous inspections done in the last few years, make that information available to the buyer.
Disclosure also applies to federal laws. For example, those selling homes built before 1978 must disclose any known lead-based paint problems.
Don't be afraid to disclose information about your property. Disclosure laws were created to protect buyers, but they also protect sellers. If all the information about a property is revealed up front, you're less likely to be involved in disputes after the sale.
If you’re a buyer looking for a home, look closely at the disclosure notice provided by the seller. If any items concern you, ask questions and investigate. But there are other steps you can take to protect yourself and your financial interests, too. For starters, make sure you hire an inspector. For a few hundred dollars, you get a professional to look into all the systems and components and report to you where deficiencies or potential problems exist … clearly a worthwhile investment.
When you have specific concerns, or when the inspector suggests it, you may also want to hire specialists to look at certain things, such as a structural engineer to examine a potential foundation problem. Yes, you will have to pay for these professionals, but you’ll want to know if there are expensive repairs in a property’s future before it becomes your property. To find a reputable inspector, ask for recommendations from friends, family, co-workers or your Realtor, and make sure your inspector is properly licensed.
For everyone’s protection
Disclosure is a necessary facet of the real estate transaction, helping to protect both buyers and sellers and ensuring lots of smiles on closing day. If you have questions about disclosure, ask your Realtor for advice. Realtors are a wealth of information on this subject.
Whether you're interested in buying your first home, your next home, or just want to know more about home-ownership in general, I encourage you to check out a couple of great online resources: http://www.texasrealestate.com/ or http://www.har.com/ and for all of your Pearland TX and Northern Brazoria and Galveston County real estate needs, please visit my site at http://www.danfrankrealty.com/. All of these sites offer tons of useful, real estate-related information geared specifically for Texans.
Danny Frank is a local Pearland TX Real Estate expert! You can see my entire blog at http://www.pearlandrealtyblog.com
My column was also published in the 12July09 edition of the Galveston County Daily News