Selling? These Are Your Disclosure Obligations


If your home has a specific problem that could affect the enjoyment of the new homeowner or even lower the property’s value, you’ll need to disclose it. If you fail to do this and a major problem arises as a result of that particular issue after the buyer purchases and moves into the home, you could find yourself in legal hot water.

Disclosure statements are important because they allow buyers to better evaluate whether or not to purchase a specific property, or what kind of price they should offer and what type of work will need to be done on a home if they do decide to go through with the transaction.

In the majority of states across the country – including California – you would be breaking the law if you knowingly hide major problems with your home before selling it. In California, sellers need to fill out a disclosure form that specifies every known defect in the home.

In general, all residential sellers with properties containing one to four units in the state of California are required to fill out and submit written disclosures to buyers.

Not only do disclosure statements help provide pertinent information to buyers, they also protect sellers from potential legal action. This statement gives the seller a chance to come clean about any known problems in the home that could have a negative impact on the value or enjoyment of the property.

Types of Disclosures That Must Be Made to Buyers

A number of issues will have to be disclosed to buyers before a real estate transaction closes, including any one of the following:

  • Leaky roof
  • Any ill-functioning appliances
  • Room additions
  • Work done without a permit
  • Damage to any part of the home
  • Presence of mold
  • Termite problems
  • Major construction projects nearby
  • Neighborhood noise issues
  • Whether any deaths occurred in the home in the last three years
  • Information about the location of registered sex offenders that can be obtained from local law enforcement agencies

This list is by no means exhaustive. Your real estate agent can help you identify any particular issues with your home that should be communicated to the buyer.

The state of California provides a standard form, called the “Transfer Disclosure Statement,” which sellers need to use to communicate their disclosures, and can be obtained from a real estate agent. A “Natural Hazard Disclosure Statement” will also have to be filled out, which requires sellers to disclose possible future hazards from fires, floods, earthquakes, and so forth.

Special Form For the Disclosure of Lead

If the home you’re selling was built before 1978, you’ll need to comply with “Title X,” which is officially known as the Residential Lead-Based Paint Hazard Reduction Act of 1992.  In order to be in compliance with this law, you will need to disclose all known information about any lead paint in the home, provide the buyers with a pamphlet called “Protect Your Family from Lead in Your Home” from the EPA, allow the buyers to test the home for lead, and warn the buyer in the contract about the potential presence of lead.

When Do Sellers Need to Provide Disclosure Statements?

While there isn’t a specific deadline of when these disclosures need to be provided to buyers, as long as they are submitted in a timely manner. Some sellers will provide the disclosures before an offer is on the table, while others provide it after an offer is made.

If the disclosures aren’t given to the buyer by the time the purchase agreement is signed by both parties, the buyer can back out of the deal. If the disclosure form is given to the buyer in person, the buyer has three days to cancel the deal. If the form is delivered by mail, the deadline to back out of the deal is five days. At the end of the day, the sooner the disclosure is given, the better.

Consider Getting a Home Inspection Before Selling

The buyer will probably request to have their own home inspection done as part of the contract’s contingencies, so any issues will likely be discovered then. If you strongly suspect that your home has some defects, you might want to consider having your own inspection done on the home before you even list it.

It’s not legally required, but doing so will help you find out if anything in the home will need to be repaired or replaced, as well as help you figure out what needs to be included in the disclosure statement. By making any necessary updates, you might even be able to boost the value of the property and increase the listing price. However, you’re not necessarily obligated to make these improvements. Many times the disclosed issue can be something to be negotiated between you and the buyer.

The Bottom Line

Before you list your home for sale, find out exactly what types of disclosures you’re responsible for. Luckily, your experienced real estate agent will have that information readily available for you so you can cover your tracks when listing and selling your home. Just make sure that the buyer acknowledges having received the disclosure statement by ensuring that they sign and date the form. Full disclosure is the only way to approach your real estate transaction in order to protect yourself, and conduct yourself fairly with the buyer.