Selling a home is official business with the involvement of banks, government entities, real estate professionals, and large sums of money. So it goes without saying that as a home seller, you’ll be heavily involved in the gathering, creating and signing of important legal documents. Some of them seem extraneous--like ones that officially grant access to your home by potential buyers, but all are necessary in the eyes of the law. A well-documented process ensures with law that the home sale is conducted in an ethical, civil and legal way.
However, no document is more important than the Property Disclosure Statement. It’s an official document fully disclosing the state the property--including its present condition and any work done in the past. This is a very important form that needs to be completed before anyone looking to buy steps foot in your home.
What’s In a Property Disclosure Statement?
Typically the document requires the disclosure of:
Lead, asbestos, or radon hazards
Damage from wood-destroying pests
Any pending legal action against the property
Past flooding, leaks or mold issues
Environmental issues such as designated floodplains or wetlands
Water testing records
The type of sewage system
And any general damage or defects to any part of the home
It’s also good to gather other relevant information to disclose in the form, like:
The age of the home
How long you’ve owned it
How long you’ve occupied it
If you lease all or any part of the property
Nearly all states require the Property Disclosure Statement, and some are more stringent in the amount of information included on the form. In some states, like Maryland, the seller may fill out a Property Disclaimer if they have no knowledge of any defects with their home. In that case, the buyer would likely get a home inspection themselves. However, if the home is older and has known issues, it is highly recommended to consult a real estate agent to learn what is required by your state. Failure to disclose certain problems with the home may grant the buyer the legal right to sue later on.
Should You Conduct a Home Inspection in Conjunction with a Property Disclosure Statement?
A home inspection by a licensed inspector is recommended. With the legal implications of not completing the form correctly, you’ll want a professional who may be able to discover any unknown problems with the home. With full knowledge of what damage or defects may bring down the value of the house, you can make repairs before completing the form, which may help with the sale.
Finalizing the Property Disclosure Statement
Make sure your Property Disclosure Statement is signed and dated by you and by the buyer. This provides legal proof that both parties have acknowledged the disclosures. If you live in a state that does not require property disclosures, look for any recommended forms they may offer. If they offer no form, you may want to consult with a real estate lawyer to draft a disclosure and have a buyer sign it to protect yourself in case of any surprise legal action down the road.
The completion of the form helps expedite the selling process as well. With the information it provides, it alleviates any guesswork or skepticism by the buyer about the condition of the home as you present it. It was created to get the home buying process started off with transparency and fairness for all.