Utilize your property disclosure

By Justin Hunter

There are a lot of uncertainties associated with buying a house. Once you go through the lengthy process of finding the home, settling on a price and obtaining a mortgage, you have still have to sign the closing settlement. Once you sign that document, the house is yours.

But there are many uncertainties associated with buying a home. What if something major is detected within a couple of weeks? Who will pay for it? If you do not properly utilize your property disclosure, you will have to pay to fix the damages.
The article, “Property Disclosures: The Right To Know” written by Nancy Chadwick and posted on reiclub.com, offers helpful tips for buyers on how to best protect their purchase through the property disclosure.

“As buyers and sellers, you should be aware of your rights and responsibilities relating to disclosure of property conditions. These exist because of laws enacted by Congress and state legislatures and from principles that have evolved from case law or court opinions.”

Requirements and laws associated with property disclosures vary state to state. For the most part, the agreement that must be signed by both buyer and seller contains questions concerning the existing structures and major systems, such as the basement, roof, plumbing, heating and electrical.

“The seller may also have to disclose whether there are areas of wetlands and floodplain on the property, excavation and fill, underground storage tanks, hazardous substances, defects and dangerous conditions, and issues that could affect title (e.g., boundary disputes, encroachments, easements, common driveways, judgments and liens).”

Now, if you are the buyer, you have the power to attach a disclosure statement with your personal preferences and attach it to the legal contract. The seller has to sign and agree to it but if they don’t, you can threaten to back out of the deal.

“By using a clause like ‘The property disclosure statement is attached hereto as Exhibit ‘X’ and incorporated herein by reference,’ the disclosure report becomes part of the purchase contract, just like any other provision in the contract.”

This could ultimately provide you the upper hand in terminating or renegotiating the purchase contract if something in the attached agreement was proven to be inaccurate or false.

“Another benefit would be that it would flush out situations where the seller was not being truthful in the disclosure statement. So, if a seller refuses to allow the disclosure statement to become a part of the purchase contract that should tell you that perhaps the seller is trying to hide something. (If a seller refuses to give you a disclosure statement, that should raise a big red flag!)”

There are also varying state requirements that stipulate the seller has to disclose “material facts” or things that have nothing to do with the actual property.

Some states require the seller to disclose if a violent crime took place or if the property is believed to be haunted.

As a seller, you should disclose anything you are unsure of. If you have to ask yourself “Should I disclose?” then you should. If you do not and the buyer finds out later and it was required by law to do so, you could face major charges.

“Maybe the buyers wouldn’t back out of the deal even if they knew about these conditions, but the point is that they have the right to be told about them and then to make their decision with those facts in hand. Aside from avoiding potential lawsuits, there’s another benefit to disclosing: a good night’s sleep.”

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