To Disclose or Not To Disclose &mdash That is the Question by Lisa Getson
When selling a house today every seller must fill out a Seller's Property Disclosure Statement and every buyer must read and acknowledge it prior to signing an Agreement of Sale, as their offer is based on the contents of that statement. That is the law. What exactly is a Seller's Property Disclosure Statement? It is a document which is approximately five pages long and which asks several questions pertaining to the property which is being sold. It is the seller's legal obligation to answer all of the questions honestly and to the best of his or her ability.
Essentially, the Seller's Property Disclosure Statement asks questions about the conditions of the house. For example, there are questions about the roof, heat, air, plumbing, electric and structure, all of which need to be answered. How do you answer the questions? What needs to be disclosed? The law states that a seller needs to disclose any and all material defects. A material defect is something which adversely impacts the value of the home.
While it is the seller's obligation, not the realtor's, to answer all of the questions, a realtor should be able to provide guidance as to what constitutes a material defect.
Most of the questions are straightforward. How long have you owned and lived in your home? Have you done any remodeling to your home? What type of roof do you have? Do you have a fireplace and does it work? Do you have working smoke detectors? List all appliances in the kitchen. Is your cooking gas or electric? What type of heat do you have? Do you have central air? Did you ever have pets in your home? Do you have termites? Is your home currently under contract for any pests? Do you have radon? Have you ever done a radon test?
Other questions ask about the age of certain items in the house. How old is your roof? Your heat? Your air? If you do know, I suggest listing the exact age. If you don't know, simply state that you don't know. However, I do not suggest merely writing "new" or "newer" as there is a gray area as to when a heater, for example, goes from being new to newer to not new anymore. I once was involved in a case where I represented the buyer as their realtor, and the seller and the seller's agent disclosed and advertised the windows in the home as new. My buyer relied on that information when making an offer on the home. In actuality, the windows in the house were 21 years old. In defense, the agent stated that the windows were "new" to the seller when they purchased the home several years before. They were obviously no longer "new." It is for this reason that I always recommend writing the exact age of things such as windows, a roof, and heating and cooling systems. And if you don't know the exact age then I suggest stating so, but do not attempt to guess as to whether something is "new" or "newer."
The proper age of the windows on that property should have been disclosed since it affected the value of the property. Hypothetically, had the windows in the house been old and leaked, that would have had to be disclosed since that would have been a material defect that impacted the value of the property. Even if the old windows had been replaced, it would still have to be disclosed that the old ones leaked due to the possibility that the leak could have caused damage to the property, thus affecting its value.
There are some things, however, which do not need to be disclosed. For example, if you had a leaking showerhead or faucet and it was fixed, there is no need to disclose that fact as something so minor would not adversely affect the overall value of the property.
There are also few exceptions in which the Seller's Property Disclosure Statement does not apply. Where the seller is an administrator or executor of an estate, the seller is exempt from answering any questions about the subject property, as an administrator or executor is presumed to not know anything about a property in which they did not live. Second, the Seller's Property Disclosure Statement does not apply to new construction since the owner of the property is a builder who is passing on a not yet lived in new home in which everything is brand new and supposedly under warranty. Third, it could be argued that someone who owns a house but rents it out does not have to fill out a Seller's Property Disclosure Statement since they do not live there. This argument could be rebutted, however, with the fact that a person who acts as a landlord and cares for a property has enough knowledge about its inner workings to answer the questions.
I always advise my clients to err on the side of disclosing. My motto is simple: "Disclose! Disclose! Disclose!" Tell all, be truthful and you can never go wrong!
Send your real estate-related questions to Lisa Getson at firstname.lastname@example.org.