The Honest Truth about Disclosures
As a seller, you are legally bound to disclose any and all defects in your home prior to the sale. Buyers can sue for damages and conceivably force the seller to reclaim the house.
Though this is highly unlikely, it has been known to happen. To try and minimize the possibility of such lawsuits from taking place, many states now have mandatory disclosure laws. Sellers must make sure that the buyer is aware of any defects on the property, from water damage to structural problems and everything in between.In most states,a disclosure form is a required part of the sales documents. Falsifying information on the disclosure form constitutes fraud.
Being honest won’t scare away serious buyers. Only the most naive believe that they can find a flaw-free house. By keeping it factual, you can comply with the law and win your buyer’s trust in the process.
- Complete the form citing specific dates of incidents (i.e., “May 2006: basement seepage in northeast corner during heavy rain”
- Document efforts you have taken to correct or minimize flaws. That includes contractors’ receipts and signed-off permits from building inspectors.
- Hire a home inspector to go over your house. Correct problems the inspector finds. Attach the report and proof of repairs to the disclosure form.
Some buyers will try to use the disclosure form as a wedge to get you to lower your price after you have accepted their offer. If the buyer’s inspector discovers problems you did not know about, you will likely have to negotiation repairs. the buyers will be bringing in their own contractors and establishing their own expectations for how much the repairs cost. If you do find yourself negotiating over repairs, you have several options:
- Hire the contractor yourself and oversee the work. If you do some of the work yourself, validate its quality by having a municipal housing inspector sign off on the job.
- Accept the bid from your buyer’s contractor and co-operate with any preparatory work before closing.
- Review the bids from the buyers’ contractors and offer to cover part of the estimated cost.