Five Disclosure Mistakes to Avoid

Five Disclosure Mistakes to Avoid 5 Disclosure Mistakes That Can Jeopardize A Sale Home sellers want a quick and painless sale for the biggest price and the fewest headaches. But property condition can trip up a sale. Sellers may be tempted to remain tight tipped about condition issues in the hopes of getting the best price or not scaring away an interested buyer. This is always a bad idea. Home sellers are required to disclose major problems with the property condition before a sale closes. Fraudulent concealment of known defects is illegal. Undisclosed defects can lead to a cancelled sales contract and big lawsuits. What to Disclose Different states have different disclosure rules. California has particularly stringent requirements. Some states require sellers to complete and provide a detail property condition disclosure form. Usually, you only have to disclose problems you know about, but some states require sellers to inspect for certain defects. Issues sellers may have to disclose include: Lead-based paint: If the house was built before 1978, disclose known lead-based paint and give buyers the EPA Protect Your Family from Lead in Your Home Former meth lab Major neighborhood nuisances Natural disaster hazards Termite infestation Insurance claims filed on the property Judgement or tax liens Use restrictions and easements Some things sellers usually don’t have to disclose such as sex offenders in the area, previous owners with HIV/AIDS, and suicide or natural death on the property. Material Information By law, Arizona sellers must disclose known material (important) information about the property for sale. What’s important? Material facts impact a buyer’s decision to buy, the use of the property, or the property value. Arizona law also requires sellers to disclose an issue if buyers ask about it. While Arizona listing brokers have no duty to investigate property condition problems, they do have to disclose to the buyer in writing anything they know that could affect the value of the house. The broker must also tell the seller about such information. Disclosure Documents While Arizona does not have a promulgated disclosure form, the Arizona Association of Realtors drafted a form. Take a look at the Residential Seller’s Property Disclosure Statement (SPDS) to get an idea of what it covers.  The sales contract Arizona Realtors use requires the delivery of the disclosure within five days of offer acceptance. The SPDS is a standard disclosure statement similar to those used in other states. There are five pages of yes or no questions covering the known existence of assessments, liens, building code violations, roof leaks, flood damage, wood infestation, type of water pipes, electrical problems, and other issues. Disclosure Mistakes Here are 5 disclosure mistakes that can derail a sales transaction or end in court: Turning a blind eye: Notice a water stain on the ceiling or puddles in the garage during heavy rains and do nothing and disclose nothing? The seller could be asking for trouble. How could the sellers prove they didn’t know about it if a major problem is later discovered? Failing to update: Sellers must amend the disclosure form when new information comes to light. If the roof starts leaking a week before closing, you must tell the buyer, but you’re not required to repair it. Not disclosing repairs: Another issue is neglecting to disclose a leak or damage you had to repair: Just because a problem was fixed doesn’t mean sellers don’t have to disclose it. Ignorance of state requirements: Not checking with a real estate agent or attorney for the property disclosures required in your state is a big mistake. Disclosure requirements, documents, and deadlines vary from state to state. It’s the job of the seller’s agent or attorney to advise on such matters. Guessing: Never guess. Sales contracts and addenda are legally binding documents, and you’re responsible for the related representations. It may be wise for sellers to get an inspection before listing the property as this will help identify repair and replacement needs, find major problems, help fill out the disclosure form, and set a fair price. Whether a written disclosure document is legally required, it is the best defense against potential lawsuits. The advice is often: When in doubt, disclose. Want to learn more? Our Arizona Disclosure Issues is just one of the on-demand courses available from 360training.com, a leading real estate training provider. Enroll in interactive, online courses today! Sources: http://www.realtor.com/advice/sell/weird-seller-disclosures/ http://www.nolo.com/legal-encyclopedia/required-disclosures-selling-real-estate-30027.html http://www.nolo.com/legal-encyclopedia/arizona-home-sellers-disclosures-required-under-state-law.html