Saturday, January 19, 2008

To Tell Or Not To Tell - Real Estate Disclosures

Whether you are buying or selling residential real estate, your contract, if correctly written, will require a variety of disclosures. Disclosures are documents provided to the buyer, usually by the seller or someone hired by the seller, divulging information which could materially affect the desirability or marketability of the property. Some disclosures are mandated by law; others are dictated by common sense.

They cover a lot of ground, everything from whether the home has legal and functioning smoke detectors to whether the neighbors are noisy. But whatever the topic, they exist as an attempt to stop misunderstandings and potential lawsuits.

Because disclosures cover so many areas, it is sometimes difficult to decide what should and should not be disclosed. But what if the seller knows about a condition that may occur? Should that be disclosed? As an example, let's assume the seller lives near an open lot that is under negotiations to be developed. Nothing is finalized and no one has actually started building. But the seller knows that this could occur. Should the seller disclose this?

The answer is yes. This is just the sort of information a buyer needs to know and a seller has an obligation to disclose. These potential developments may not be obvious to someone driving through the area, but the seller knows about them. So even if building hasn’t begun, a buyer has the right to be informed of the possibility of development.

This information could directly affect a purchaser’s assessment of the value of the property. He could decide that he doesn’t want to live in a place where trucks and workers will be driving through on a daily basis. He may not want to live with the noise, dust and disarray that happens with construction. On the other hand, the buyer may see this as a boon. More building brings more buyers into the area and, perhaps, an increase in property values.

In any event, it is up to the seller to disclose this information. And it is up to the buyer to decide how this information will affect his desire to purchase. This is the essence of the disclosure laws.

2 comments:

Agent Angel said...

Excellent posting, and excellent blog - I've read through your past postings and they are right on! One think I always tell clients is "when in doubt, disclose!" Full disclosure has saved our clients many times over! Keep up the good work!

Anonymous said...

Thanks so much for your comment. It is especially gratifying coming from another real estate professional. If there are other topics you'd like me to address, I'd love to hear from you. Please invite your fellow realtors and clients to write me as well with their suggestions.