Congratulations, you just had your offer accepted on a house! Now it’s time to start the closing process.
There can be a great deal of documentation that goes into closing on a property, and one very important document for the buyers to be aware of is called a seller’s disclosure. Let’s discuss the types of information this document typically contains and what disclosure requirements can look like in different areas of the United States.
What Is A Seller’s Disclosure In Real Estate?
In many real estate transactions, the seller has to provide documentation to the buyer that discloses any issues with the property that the seller is aware of that could hinder the new owner’s enjoyment of the home. This is called a Seller’s Disclosure statement (though it can sometimes also be called a Seller’s Disclosure form or a property disclosure statement).
The buyer typically receives a Seller’s Disclosure statement as part of the closing process — after their offer is accepted, they’ll be given a few days to review the information the seller has disclosed, and they can usually back out of the offer if any negative information about the property pops up.
An important thing to note, though, is that the Seller’s Disclosure is not the same thing as a home inspection. It can be wise for interested buyers to insist on an inspection of the property in addition to the Seller’s Disclosure in order ensure that no underlying issues with the home have been missed and that the buyer is precisely aware of what they’re getting themselves into by purchasing this property.
What Information Can Be Included In A Seller’s Disclosure Statement?
There is a substantial amount of important information that can be featured in a seller’s Closing Disclosure statement. Here are some of the most common categories:
Repairs Made And Repairs Needed
In addition to discussing renovations or remodeling projects that have been completed, Seller’s Disclosure statements often contain a report of all of the repairs that have previously been made on a given property, like damage to the roof or cracks in the foundation. They also, very importantly, can disclose all of the existing damage in or around the home that’s in need of repair. If there’s anything like broken appliances or water damage that a new homeowner will have to address, it’s crucial for them to be aware of it in advance so that they can financially prepare to make necessary repairs once they move in or choose to walk away from the transaction if the repairs end up being too costly.
Property Defects And Threats To Homeowner Safety
Another important set of disclosures that tend to be made in a seller’s statement are any issues with the property that could pose a threat to the safety of its new tenants. If, for example, the home is built in an area that is prone to floods, earthquakes, sinkholes or other natural disasters, it’s important for new homeowners to be made aware so that they can prepare with the proper insurance or action plans.
If the property contains hazardous or toxic materials like asbestos, radon, lead paint or mold, it’s also vital for anyone new to the property to know that so they’re able to formulate a removal plan in order to protect their health.
If a given real estate property is lacking an appliance or home system that would be considered “essential” for a typical modern-day resident, like a dishwasher or a water heater, some sellers would be obligated to disclose that information in their statement.
Seller’s disclosure statements often provide details surrounding any restrictions or limitations on the property that the new homeowner will have to deal with and abide by, like outstanding liens, easements, zoning regulations or restrictive covenants.
A Seller’s Disclosure statement can include information regarding problems the seller encountered with the surrounding neighborhood while living on the property. These can include property line disputes, nearby sources of loud noises or bad smells, or other nuisances caused by residential, commercial, or industrial properties in the area. If a property is subject to homeowners association (HOA) rules and regulations, a seller may also disclose details about the types of governance the new homeowner will have to follow.
Deaths On The Property
Finally, a Seller’s Disclosure can include details of deaths by natural causes, accidents, suicides, or homicides that have taken place on the property. Some home buyers have genuine superstitions about purchasing a home with that history, so gaining knowledge of any life lost on the property could be an important factor in an interested buyer’s decision on whether or not to complete the purchase.
Sample Seller’s Disclosure Documents By State
Below are examples of what a standard Seller’s Disclosure form might look like in different states across the U.S. Many states have specific laws regarding which of the above details a seller must disclose in their real estate transfer documentation, and those differences in requirements are reflected in each form.
However, you will also see that several states are listed as “caveat emptor” states — this phrase, translating from Latin to “let the buyer beware,” means that sellers are not required to produce formal disclosure documentation during the closing process. In caveat emptor states, it’s up to the buyer to assess the property they’re interested in to determine whether it’s a suitable purchase for their needs. That said, home sellers in caveat emptor states are still typically expected to disclose anything wrong with the property in good faith before selling it to a prospective buyer.
Alabama is a caveat emptor state.
State of Alaska: Residential Real Property Transfer Disclosure Statement
Arizona Association of REALTORS®: Residential Seller’s Property Disclosure Statement
Arkansas is a caveat emptor state.
State of California Department of Real Estate: Disclosures In Real Property Transactions
Colorado Real Estate Commission: Seller’s Property Disclosure (Residential)
State of Connecticut Department of Consumer Protection: Residential Property Condition Disclosure Report
State of Delaware: Seller’s Disclosure of Real Property Condition Report
Florida REALTORS®: Seller’s Property Disclosure — Residential
Georgia is a caveat emptor state.
Hawai’i Association of REALTORS®: Seller’s Real Property Disclosure Statement
Commercial Brokers Association: Property Condition Disclosure (Idaho)
Illinois REALTORS®: Residential Real Property Disclosure Report
State of Indiana: Seller’s Residential Real Estate Sales Disclosure
State of Iowa: Seller Property Condition Disclosure
Lawrence Board of REALTORS®/Equal Housing Opportunity: Seller Property Condition Disclosure Report
Kentucky Real Estate Commission: Seller’s Disclosure of Property Condition
Louisiana Real Estate Commission: Property Disclosure Exemption Form
Maine Realty: Seller’s Property Disclosure
Massachusetts Association of REALTORS®: Seller’s Statement of Property Condition
Michigan REALTORS®: Seller’s Disclosure Statement
Minnesota State Bar Association: Seller’s Disclosure Statement
State of Mississippi: Property Condition Disclosure Statement
St. Louis Association of REALTORS®: Seller’s Disclosure Statement
Montana Association of REALTORS®: Owner’s Property Disclosure Statement
Nebraska Real Estate Commission: Seller Property Condition Disclosure Statement
Nevada Real Estate Division: Seller’s Real Property Disclosure Form
New Hampshire Association of REALTORS®: Property Disclosure (Residential Only)
New Jersey Association of REALTORS®: Seller’s Property Condition Disclosure Statement
REALTORS® Association of New Mexico: Seller’s Property Disclosure (Residential)
NYS Department of State, Division of Licensing Services: Property Condition Disclosure Statement
State of North Carolina: Residential Property and Owners’ Association Disclosure Statement
North Dakota is a caveat emptor state.
State of Ohio, Department of Commerce: Residential Property Disclosure Form
Oklahoma Real Estate Commission: Residential Property Condition Disclosure Statement
Oregon Real Estate Forms: Seller’s Property Disclosure Statement
The Pennsylvania Code: Seller’s Property Disclosure Statement
Rhode Island Association of REALTORS®: Rhode Island Real Estate Sales Disclosure Form
State of South Carolina: Residential Property Condition Disclosure Statement
REALTOR® Association of the Sioux Empire/South Dakota Real Estate Commission: Seller’s Property Condition Disclosure Statement
Tennessee REALTORS®: Tennessee Residential Property Condition Disclosure
Texas Real Estate Commission: Seller’s Disclosure Notice
Utah Association of REALTORS®: Seller’s Property Condition Disclosure
Vermont is a caveat emptor state.
Virginia is a caveat emptor state.
Northwest Multiple Listing Service: Seller Disclosure Statement (Unimproved Property)
West Virginia is a caveat emptor state.
Wisconsin Statutes: Disclosures by Owners of Real Estate
Wyoming is a caveat emptor state.
Why Seller’s Disclosures Matter
At the end of a real estate transaction, it’s important for the home buyer to feel confident in the decision they’re making to purchase the property. By reviewing all of the information provided in a Seller’s Disclosure statement, buyers can gain a little more clarity on whether they can move into their new home with peace of mind or if what they’re about to purchase is ultimately not worth the investment or the headache.
Have more questions about the closing process? Talk to one of our experts for more information!