Answers To All Your Basic Questions About Disclosure Statements
Perspective home buyers beware: every stage of the home buying process, from applying for a loan, to putting in an offer, and finally closing on the house, includes reviewing extensive documentation. As appealing as it may seem to just sign everything in order to get on with it, its important to slow down and pay proper attention to everything, especially your disclosure statement. If you dont, you could open yourself up to legal and financial liability, or carelessly sign away valuable consumer protections.
A disclosure statement can be what stops you from buying a money pit instead of a dream home. In order to better protect your investment, here is a guide answering all your basic questions about real estate disclosure statements.
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What Is a Disclosure Statement?
In real estate, a disclosure statement reports in clear language certain facts about the property that buyers should know,
including the age, history, problems, and condition of the home. By signing the document, the buyer and seller are acknowledging that the information was divulged in writing before the sale took place.
What Information Does a Disclosure Statement Contain?
A disclosure statement contains anything about the house or neighborhood that would affect the buyers decision to purchase the house at the price the seller is asking. With the exception of some federal regulations, every state has its own laws regarding what needs to be disclosed, but typically, a disclosure will include pertinent things such as:
- Past issues and damages: this can include plumbing, foundation, or electrical issues, a faulty AC or heater, as well as water or termite damage
- Repairs: any repairs, like a leaky pipe being fixed or part of the floor being replaced, should be disclosed
- Upgrades: things like an upgraded roof, countertop, or entire bathroom can be included in a disclosure statement
- Outside hazards: this includes things like earthquake or flooding zones, air or noise pollution, or areas congested with high traffic
- Deaths or violent crimes: this includes unnatural deaths like suicide and murder, as well as any gruesome crimes having occurred on the property.
Again, depending on what state you live in, not everything needs to be disclosed. However, many real estate agents advise that sellers take advantage of full disclosure to avoid any misunderstandings
in the future. As a buyer, if there is something you are concerned with that is not in the disclosure statement, just ask. Sellers and agents must reveal everything they know about the home if asked.
Why Is A Disclosure Statement Important?
Disclosures are equally important to both the buyer and the seller. The benefits to the buyers are obvious, of course. They inform buyers of the homes potential problems, flaws, or negative features
before the purchase even takes place.
For sellers, a disclosure can act as a type of security.
When a seller fully discloses information, and the buyer acknowledges receipt, the seller can prove that the buyer knew what was being purchased before they completed the transaction. This provides sellers legal protection if a lawsuit should ever arise.
What Is The Proper Use Of A Disclosure Statement?
If you are a buyer and you feel a need to disclose something pertinent in order to avoid a future lawsuit, ask a local realtor for the appropriate form. Buyers should ask for signed seller disclosures whenever they enter into negotiations to purchase a home. Copies of these forms should be saved in a secure place along with other real estate papers, just in case you need to refer to them in the future.
How Can Understanding A Disclosure Statement Save Time And Money?
Knowing exactly what you are getting into will make you more comfortable about the purchase of the house. Even if there are trouble areas that need to be taken care of, at least there wont be any surprises, and you can set aside everything you need to take care of it. No home buyer wants to deal with unforeseen problems and expenses,
especially after paying so much for it in the first place, so review the disclosure carefully and completely to save yourself, and the buyer, time and money.
SEE ALSO: 5 Questions You Need To Ask At An Open House
Now that you have a better understanding of disclosure statements and the importance they play when selling and purchasing a home, pay close attention to yours contains. A little tedious reading now can go a long way in preventing stress filled days and sleepless nights in the future.