Every property has a story and its idiosyncrasies. It can be said with complete certainty that every home has flaws. In fact, it is highly likely that at some point during homeownership, something has occurred that will need to be disclosed when the property is sold. As a broker who has spent over a decade working with sellers, I have yet to meet one who hasn’t expressed trepidation about disclosing potential or past issues that could influence a buyer’s decision. It is this trepidation that leads a seller to ask: what and how much does a seller tell, not only their real estate broker, but also potential buyers?
Purposely withholding pertinent information about a property’s condition will not only jeopardize the sale but will most certainly land a seller in a serious conundrum that will lead to a sale fail and legal ramifications. About a year ago, I worked on a transaction where the seller purposely and knowingly lied on the Seller’s Property Disclosure Statement. These issues were discovered during the home inspection. The seller chose to double down on their failure to disclose, without considering the paper trail that followed the property. In this instance, attorneys were involved, and my clients ultimately walked away from the transaction. There have been many instances of lawsuits across the country in which sellers have paid substantial amounts of money to buyers because the seller was not forthcoming or honest with important information about the property.
- Naomi Hébert / Unsplash
Think of disclosure as a parallel to online dating. A person sees a dating profile that interests them. The photos look real, everything seems good and there is a certain level of trust that the other party is being transparent and forthcoming; and then, they meet, and it turns out that the information presented and given on the dating profile was anything but forthcoming. My point in using this analogy is that more often than not, the reality of a situation will eventually come out; be it while selling a property or online dating.
Real estate professionals are employed not only to help one in the successful sale of their property, but also to help protect a seller from potential costly issues before, during and after a transaction. It cannot be stressed enough the importance of discussing all potential issues with one’s real estate professional. Realtors are hired to help guide a seller through the process and protect them from sale fails that are a result of failures to disclose and mitigate the potential disclosure issues.
Some of the more common disclosure areas are the presence of lead-based paint, pests, fire and mold/water damage. It is crucial to disclose fire, water damage or mold. First because, it will likely come up on a home inspection, so it is best to disclose the information up front. And second, because a buyer can request a CLUE (comprehensive loss underwriting exchange) report. This report allows the buyer to see any insurance claims that have been made on the property in the last seven years.
Other areas that are important to disclose upfront are things like permitting. Are there any structures or major remodels that have been done that require city or county permitting that were not permitted? This is a big one for buyers, as it determines potential liability to remedy the permitting issues down the road, whether or not the property is financeable and determines insurance coverage and liability.
It is essential to disclose to your real estate professional any potential issues and trust their guidance and knowledge. They are the experts in real estate law and Realtors cannot protect you from what they don’t know. The rule of thumb is to disclose everything one knows about the property. Better to be open and over-disclose than to have the proverbial skeleton come dancing out of the closet later down the road, causing a costly mess in its wake.
