What to know about disclosure
There’s
an old adage that what you don’t know won’t hurt you, but when it comes
to buying real estate, that’s not the case. After all, wouldn’t you
want to know if the dream house you’re buying had flooding problems in
the past or has a defective roof?
That’s
why full disclosure – a seller’s obligation to disclose facts about
properties for sale (such as conditions like occurrence of past floods
or structural problems) – is critical when it comes to buying or
selling a home. If you’re selling, buyers need to know material facts
about your home – that is, anything that could materially affect the
sale price or influence a buyer's decision to buy it. And, if you’re
buying, as a concerned consumer with a big financial commitment at
stake, you want to make an informed decision about what you’re buying.
The
National Association of Realtors reports that the major causes of
post-sale disputes and lawsuits center around defects and disclosure.
But most disputes can be avoided if proper disclosures are made. That’s
why most states, including Texas, require some type of formal seller
disclosure.
What’s on a disclosure form?
A
disclosure form is a notice certain sellers are required to give
potential buyers on or before the effective date of a real estate
contract for sale, covering in reasonable detail the seller’s awareness
of any defects in the property before the sale.
For
example, if you’ve had a termite problem in the past, that’s something
that prospective buyers should know. Or, if the roof has a leak, buyers
need to know that, too.
Attention sellers …
Intentionally
withholding information about a property when you sell can have serious
legal consequences. Talk to your Realtor and attorney and make sure you
understand your disclosure responsibilities. You don’t want to
inadvertently leave something out and have to deal with expense,
hassles and possible legal consequences later. Also, if you’ve had
previous inspections done in the last few years, make that information available to the buyer.
Disclosure
also applies to federal laws. For example, those selling homes built
before 1978 must disclose any known lead-based paint problems.
Don't
be afraid to disclose information about your property. Disclosure laws
were created to protect buyers, but they also protect sellers. If all
the information about a property is revealed up front, you're less
likely to be involved in disputes after the sale.
Attention buyers…
If
you’re a buyer looking for a home, look closely at the disclosure
notice provided by the seller. If any items concern you, ask questions
and investigate. But there are other steps you can take to protect
yourself and your financial interests, too. For starters, make sure you
hire an inspector. For a few hundred dollars, you get a professional to
look into all the systems and components and report to you where
deficiencies or potential problems exist … clearly a worthwhile
investment.
When
you have specific concerns, or when the inspector suggests it, you may
also want to hire specialists to look at certain things, such as a
structural engineer to examine a potential foundation problem. Yes, you
will have to pay for these professionals, but you’ll want to know if
there are expensive repairs in a property’s future before it becomes your
property. To find a reputable inspector, ask for recommendations from
friends, family, co-workers or your Realtor, and make sure your
inspector is properly licensed.
For everyone’s protection
Disclosure
is a necessary facet of the real estate transaction, helping to protect
both buyers and sellers and ensuring lots of smiles on closing day. If
you have questions about disclosure, ask your Realtor for advice. Realtors are a wealth of information on this subject.
Whether you're interested in buying your first
home, your next home, or just want to know more about home-ownership in
general, I encourage you to check out a couple of great online
resources: http://www.texasrealestate.com/ or http://www.har.com/ and for all of your Pearland TX and Northern Brazoria and Galveston County real estate needs, please visit my site at http://www.danfrankrealty.com/. All of these sites offer tons of useful, real estate-related information geared specifically for Texans.
Danny Frank is a local Pearland TX Real Estate expert! You can see my entire blog at http://www.pearlandrealtyblog.com
My column was also published in the 28June09 edition of the Galveston County Daily News