What are disclosures in real estate? Why Are They mportant?

When you buy or sell a property, you need to be aware of the concept of disclosure.

Disclosure is the process of revealing any known defects or problems with the property that could affect its value or safety.

Disclosure is not only a legal obligation for the seller, but also a protection for the buyer.

In this article, we will explain what disclosure means, how it works, and why it is important in real estate transactions.

An image of a a house being sold
What are disclosures in real estate? [PHOTO COURTESY OF REAL HOMES]

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What is a property disclosure statement?

A property disclosure statement is a document that the seller fills out and provides to the buyer, usually as part of the purchase contract.

The statement contains information about the condition and history of the property, such as:

1.Health and safety hazards, such as mold, radon, asbestos, or lead paint

2.Structural defects, such as foundation issues, roof leaks, or water damage

3.Mechanical issues, such as HVAC, plumbing, electrical, or appliance problems

4. Environmental issues, such as flooding, landslides, earthquakes, or noise

5.Legal issues, such as liens, easements, zoning violations, or lawsuits

6.Renovations, such as work done with or without permits, or changes to the original floor plan

7.Other issues, such as pest infestations, neighborhood disputes, or haunted houses

The property disclosure statement is based on the seller’s knowledge and experience of living in the property.

The seller does not have to investigate or inspect the property, but they have to answer the questions honestly and accurately.

The seller can also attach any relevant documents, such as receipts, invoices, warranties, or inspection reports, to the statement.

Why is disclosure important?

Disclosure is important for both the seller and the buyer, as it helps to avoid potential problems and disputes in the future.

For the seller, disclosure can

1.Reduce the risk of legal liability.

If the seller fails to disclose a material defect that they knew or should have known about, they can be sued by the buyer for fraud, negligence, or breach of contract.

The seller can also face penalties or fines from the state or local authorities for violating disclosure laws.

By disclosing all the known issues upfront, the seller can avoid these consequences and protect themselves from future claims.

2.Increase the chances of a successful sale.

Disclosure can also help the seller to sell the property faster and at a fair price.

By being transparent and honest with the buyer, the seller can build trust and credibility, and avoid unpleasant surprises or delays during the closing process.

The buyer will also appreciate the seller’s disclosure and feel more confident about their purchase decision.

For the buyer, disclosure can:

1. Help them make an informed decision.

Disclosure can help the buyer to learn as much as they can about the property and its potential problems before they close the deal.

The buyer can use the information from the disclosure statement to evaluate the property’s value, negotiate the price and terms, request repairs or credits, or even back out of the contract if they find something unacceptable.

2.Save them money and hassle.

Disclosure can also help the buyer to avoid buying a property that has hidden defects or issues that could cost them a lot of money and trouble in the future.

The buyer can avoid inheriting the seller’s problems and liabilities, and enjoy their new home without worrying about unexpected repairs or damages.


How does disclosure work?

Disclosure laws vary from state to state, and even from city to county, so it is important to check the specific requirements and forms for your area.

However, the general process of disclosure is usually as follows:

1.The seller prepares the property disclosure statement, either by themselves or with the help of their real estate agent or attorney.

The seller should answer all the questions truthfully and completely, and provide any supporting documents or evidence.

The seller should also update the statement if they discover any new issues or changes during the sale process.

2. The seller provides the property disclosure statement to the buyer, either before or after they receive an offer, depending on the local laws and customs. The seller should also keep a copy of the statement for their own records.

3.The buyer reviews the property disclosure statement, and asks any questions or clarifications they may have. The buyer should also verify the information from the statement by conducting their own due diligence, such as hiring a professional home inspector, appraiser, or contractor, or consulting with their real estate agent or attorney.

4.The buyer acknowledges the receipt of the property disclosure statement, either by signing it or by signing a separate form.

5.The buyer should also keep a copy of the statement for their own records.

Disclosure is a key part of any real estate transaction, as it ensures that both the seller and the buyer are aware of the condition and history of the property they are dealing with.

Disclosure can help to prevent misunderstandings, conflicts, and lawsuits, and to facilitate a smooth and successful sale.

Therefore, it is essential that both parties take disclosure seriously and follow the laws and best practices in their area.


Disclosure is a vital aspect of real estate transactions, as it allows both the seller and the buyer to know the true condition and history of the property they are dealing with.

Disclosure can help to avoid legal issues, disputes, and surprises, and to ensure a fair and smooth sale.

Both parties should follow the disclosure laws and best practices in their area, and be honest and transparent with each other.

By doing so, they can protect their interests and achieve their goals in the real estate market.



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