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DISCLOSURE: WHAT SELLERS NEED TO TELL BUYERS
Because of stricter disclosure laws and higher expectations from buyers, sellers have more responsibility to disclose any fact that could affect the sale of the property.
States are cracking down on sellers’ obligations to disclose known material facts about a property for sale, especially conditions not readily apparent to a buyer (such as a cracked foundation). A material fact is anything that could influence a buyer’s decision to purchase a home or affect the sales price. The major cause of post-sale disputes and lawsuits involve defects and disclosure. Most of the cases could have been avoided if proper disclosures had been made.
Learn the Law
The statutes governing a seller’s obligation to make disclosures vary by state.
• State laws: A majority of states require some form of seller disclosure. The disclosure form also varies. Some states re- quire a seller to complete a form that includes questions about the property condition. In other states, disclosures can be made verbally. In some states, seller disclosures are voluntary. The only sellers excluded from disclosure laws are banks and mortgage companies with foreclosure properties.
• Federal and local laws: In addition to state statutes, some local and federal laws require sellers to make specific disclo- sures. Federal law, for example, requires sellers of homes built before 1978 to disclose any known lead hazards.
• Real estate company requirements: Some major real estate companies require prospective sellers to complete a disclo- sure form before a listing is accepted.
Hazards Lurk
Structural defects, such as a leaky roof, are one thing. Health risks from exposure to toxic chemicals is another issue altogether. Homebuyers are becoming increasingly concerned about environmental hazards and toxic materials in houses, especially older homes built when there were fewer regulations. The most common toxic substances found in homes in- clude lead paint, lead pipes, asbestos insulation, asbestos ceilings, formaldehyde insulation and glues, and carbon monox- ide or radon gases. Unless sellers have the home tested for the substances, they may not be aware that a problem exists. More buyers are requesting tests for toxic substances and may expect you, the seller, to correct the problem or offer a lower price to cover the cost of removing the substances.
Toxic Materials in the House
• Lead: A potentially lethal toxic metal that builds up slowly in the bloodstream, lead causes damage to the central ner- vous system, kidneys, circulation, muscles, joints and hearing. It can be found in chipped, cracked or peeling paint (manu- factured before 1978 when lead-based paints were allowed), pipes in older homes and solder joining copper pipes in newer homes. Federal law requires sellers to disclose any knowledge of lead-based paints in the home and include a federal form about lead-based paints with the sales contract (buyers have 10 days to inspect for lead and terminate the contract without penalty). You are not required to have your home inspected for lead before you sell or to remove any lead-based paint.