Seller’s Disclosures: Learn the Real Condition of a Potential Home

Aalto Insights Team
  ·  
Apr 12, 2023

Buying a home is one of the most expensive purchases many of us will make in our lifetimes. Before you spend years’ worth of savings on a real estate transaction, you have the right to know about the condition of the house you’re buying. 

So what document provided by the seller describes the condition of the property? This is a Seller’s Disclosure (a.k.a. a “disclosure statement” or a “property disclosure”). A Seller’s Disclosure is a legal document that provides accurate information about the home you’re about to buy, including any known defects or issues. By having this document detail the overall condition of a house, you can make a more informed decision about whether or not to buy it. 

In this post, we’ll explore a Seller’s Disclosure, the types of details included, and what buyers should do with this information. 

What Is a Seller’s Disclosure?

While you might spot a few issues on listing photos or during a walkthrough, many of a home’s problems may not come up until you have a professional home inspector investigate the house. Otherwise, you may not realize that a house has encumbrances like asbestos, radon, infestations, or lead-based paint.

By law, many states — including California — require sellers to provide homebuyers with a Seller’s Disclosure. What’s included in these will vary from state to state, but they typically contain the following:

  • The property address
  • General questions about the property condition
  • List of appliances the home includes
  • List of issues the house has
  • Whether or not each of these issues was fixed
  • Additional disclosures that are not already included

Please note that the information included in a Seller’s Disclosure is not a substitute for a home inspection report. The property owner is answering these questions based on their knowledge. They’re not required to hire anyone to conduct a walkthrough of their home beforehand. The information they include is based on what previous homeowners and inspectors told them. If new issues have come up since then, they might not be included in a Seller’s Disclosure either (1) because the homeowner doesn’t know about it or (2) because they choose to remain ignorant of the problem.

Types of Seller Disclosures

What document provided by the seller describes the condition of the property? man writing on a big notebook

Here are the most common disclosures you’re likely to encounter.

History of Repairs

As mentioned earlier, sellers are required to disclose any significant repairs that have been made either by them or a previous owner and when they were made. 

For example, if the previous owner added an additional bedroom or finished the basement, the seller should mention it. They should also highlight any ongoing repairs and warranties for fixtures and appliances.

Homeowners Associations (HOA)

If an HOA or condominium association governs the home, the seller has to mention it. HOAs come with fees and rules required for homeowners to follow. While homes can benefit from a well-run HOA (who can resist stunning amenities?), they may also be a dealbreaker for potential homebuyers, especially if fees are high, rules are overly strict, or the HOA has a special assessment.

House Liens

Liens are placed on homes for several reasons. If a home has a lien, it often means that the seller owes something, such as unpaid property taxes, mortgage or loan payments, or outstanding contractors’ bills. A home with a lien can impact the owner’s ability to sell or transfer it to a new owner until the lien is paid off or released by the creditor.

A title insurance company will identify any liens on a home in case a seller fails to disclose them. If you purchase a home with a lien, paying it off becomes your responsibility.

Hazards and Damages

California state law requires you to list anything that can cause major foundational issues that may endanger the home or the homeowners, including:

  • Infestations, such as termites
  • Lead-based paint
  • Asbestos
  • Radon
  • Water damage
  • Mold
  • Contaminated soil
  • Cracks in the home’s foundation
  • Faulty electrical systems
  • Damaged plumbing systems

Property Line or Zoning Disputes

New homeowners need to know precisely where the lines are drawn on the property. If not, this can lead to problems with your neighbors and even result in legal action. If there is already pending legal action against the home you’re looking to buy, that must also be disclosed.

Neighborhood Nuisances

Speaking of neighbors, many states require sellers to inform potential buyers of any odors or noises that occur in the neighborhood. For example, if your home is near an airport, military base, or shooting range, this information must be disclosed.

Maintenance Responsibilities

Often, homes may share fences, driveways, walls, or other property in common with adjoining landowners. Seller’s Disclosures must indicate who is responsible for maintaining these common areas.

Recent Deaths in the Home

Fun (yet morbid) fact: Real estate agents are required to tell buyers if there have been any deaths in the home if the buyer asks. 

In California, sellers are legally required to mention if anyone has passed away in the house in the last three years. Many other states only require sellers to mention this if the death occurred within the last year. Either way, if a seller doesn’t disclose this information to the buyer but a realtor does, the buyer may grow to distrust the seller and wonder what else they don’t know about.

Fixtures and Furnishings Included

Sellers should inform buyers of what items will remain in the home after completing the real estate transaction. These can include appliances, such as dishwashers, washers, and dryers, lighting fixtures, and any furniture the seller isn’t taking with them. This will let the buyers know exactly what they’re getting, reducing the risk of any unwanted surprises.

What Buyers Should Do Regarding the Condition of the Property

What document provided by the seller describes the condition of the property? girl running inside their house

When you’re buying your new home, there are so many documents to read over, and they’re all important. Whether you’re reviewing your purchase agreement, seller concessions, or, in this case, the transfer disclosure statement, here are a few things you should do:

  • Work with a pro: Have a real estate attorney or a licensed expert review the disclosures with you. They’ll provide important insights regarding which issues are serious now or will be in the future. At Aalto, we have in-depth Insights in-product that are reviewed by our team of experts so you will always be prepared with all the details on any home. 
  • Conduct your own inspections: Your lender will typically always require you to get a home appraisal. You should also hire your own home inspector to walk through the home to identify any other potential problems. If you’re relying solely on the Seller’s Disclosure, you could end up spending tens of thousands on costly repairs for issues they are unaware of.
  • Double-check the disclosure document: Sellers may embellish or hide things in their disclosure statements. Luckily, there are ways to verify the information they share with you. Cross-check the information provided on a Seller’s Disclosure with public records, and ask for any warranties, receipts, and contracts for the work that’s claimed to have been done on the home.

Once you’ve read through and verified the Seller’s Disclosure, weigh the pros and cons of what’s been mentioned on the list. If you included contingencies in your purchase agreement, you could request that the seller repair some of the items listed.

Also, if you discover that the seller has failed to disclose critical details regarding their home, you can walk away from the sale. If you don’t discover these issues until after completing the real estate transaction and believe the seller purposely omitted something, you can pursue legal action against them. Because of this, sellers are strongly incentivized to be as honest as possible when filling out the Seller’s Disclosure form.

Get All the Documents You Need to Sell or Buy

If you need to navigate the Seller’s Disclosure as a buyer or seller, Aalto is here to help — with that and all the many, many documents involved in real estate.

Aalto is a self-service real estate platform that empowers consumers by making real estate transactions less daunting. Our goal is to make buying or selling a home a smoother, more enjoyable experience.

Are you ready to take control of your home purchase or sale, but still want some help along the way? Sign up with Aalto today.

Aalto is a real estate broker licensed by the State of California, License #02062727 and abides by Equal Housing Opportunity laws. This article has been prepared solely for information purposes only. The information herein is based on information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy of the information. Aalto disclaims any and all liability relating to this article.

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