What Should You Disclose When Selling Your Home?

Sellers Real Property Disclosure Bloopers

Some home buyers are getting more than they bargained for.  Have you heard about the New Jersey home with a stalker?  New homeowners received threatening letters shortly after moving in.  The writer calls himself the  "watcher".  He claims the home has been "watched" by his family for decades.  First by his grandfather in the 20s, his Dad in the 60s and now it's his turn.  He wants "young blood".  

The situation has resulted in a lawsuit. The new owners claim the sellers knew a creep was lurking around.  And the sellers claim they had no knowledge of the stalker.

Easy to understand how reading  the "Stalker's" letters would scare the new owners.  The authorities and/or courts may decide if the sellers knew about the psycho.  This is an extreme example of what can happen when new owners find bad surprises.

How Much Should You Tell Your Home's New Owners?

Most Homeowners get nervous when presented with "Seller's Real Property Disclosures".  They wonder what they should disclose and worry that they might forget something.  The best way to approach the Seller's Disclosures is "take the high road".  Ask yourself if you would want to know about the issue in question.  If the answer is yes, then disclose it.

The rules vary from State to State.  In California, sellers have to disclose if there was a death at the home.  In Nevada the seller isn't required to disclose a death unless the buyer asks.  If the buyer asks, the seller is required to answer truthfully.  Different States, different laws.

There are some basic disclosures you should be prepared to make in any State.  Each State has its own Seller's Real Property Disclosure Forms.  They ask questions about electrical, plumbing, and all the operating systems of the home.  Fixtures like showers, sinks, range, dishwasher and hot water heaters are included.

If your hot water heater broke down a couple of years ago and was replaced, let the buyers know.  They'll be happy to have a newer hot water heater.  Routine maintenance doesn't have to be disclosed.  Example - Getting a repairman out to fix the front doorbell.  Unless it's a recurring problem that might be electrical, no need to disclose it.  

What Should Be Disclosed When Selling Your Home?

Be honest about any issues with the home's appliances and operating systems.  Are you aware of any structural defects?  If you've had problems with a leak in the roof, let the buyers know.  Save all receipts for any repairs.

Structural Defects

Sinkholes aren't common in most parts of the Country.  A couple in Florida recently made ABC News headlines.  The woman who bought their home discovered a sinkhole underneath the home.  The couple had accepted a $153K check from their insurance company.  

The courts will have the final say on the sinkhole case.  On top of financial damages, they're facing 20 years in prison.  This could have been avoided if they had disclosed the sinkhole.  

If the sellers hadn't been aware of the sinkhole, it would be a different story.  Their attorney admitted they spent "some" settlement money on fixing it.  I'm not an attorney but sounds like they knew about it.  

We don't have sinkholes in Las Vegas.  Other structural issues can occur.  If you are aware of a crack in your home's foundation, disclose it. If you know the roof needs to be repaired or replaced, disclose it.

Water Damage and Mold

A bathtub drain that's slow is something that should be fixed.  Fixing a slow drain or a leaky faucet is routine maintance.  Once repaired, it doesn't have to be disclosed. 

If there is any water damage, then it must be disclosed.  You'll need to tell the buyers where the water damage occurred.  Did floors and drywall have to be replaced?  How soon were the repairs made?

Mold is always a concern when there's water damage.  The moisture can create an environment that allows it to grow.  If you suspect mold, hire a licensed Mold Inspector to perform the necessary tests.

If the results are positive you'll need a licensed mold remediation company.  You'll want someone who will warranty their work for at least a year or two.  They will remove dry wall and other materials that are beyond repair.  They'll spray chemicals to kill the mold and keep it from growing back.  After the work is complete, have it tested again.  You will need a "clean mold test" to show the buyers.    

Buyers may back out if they discover mold as part of their home inspection.  Some buyers want nothing to do with a home that's had a mold issue.  If they don't cancel, you will have to negotiate what to do about the mold problem.  They may require you to have the mold remediated.  They may ask you to drop the price.  

It's better to deal with mold as soon as it's discovered.  Once you know about it, you will have to disclose it to any buyers.  Take care of the problem and document the repairs.  Bill Gassett has given us an excellent article on "Selling a Home with Mold".

Construction Defects

If your home is involved in construction defect litigation, it must be disclosed.  This includes litigation filed by the Homeowner's Association on behalf of the community.

Kitec plumbing has been an issue in Las Vegas and many States.  If your home has Kitec plumbing, it isn't a question of "if" it will have a leak but "When".  Most homes in Las Vegas have had the Kitec replaced.  Our builders haven't used Kitec in over 5 years.  Still, we run across the occasional home that still has the old Kitec.  Any licensed home inspector should be able to tell if a home has Kitec. Sellers should always disclose if their home had it and if it's been replaced. 

Expansive soils is rare but it has led to litigation.  Fifteen years ago, a settlement awarded $21 Million to homeowners in a North Las Vegas subdivision.  The three developers involved in the suit are now defunct.  

Those are only some examples of construction defects that can affect your home.  If your home is involved in any sort of litigation, let the buyers know.  

Pests and other Annoyances

We recommend homeowners have their homes sprayed for pests once every month or two.  Staying on top of the pest issue is the best way to avoid having a problem.  We seldom see serious pest issues but they can happen.  

One final example that we've seen in the news is the Maryland home that's infested with snakes.  It's another situation where the courts are likely to have the final say.  If the sellers knew about the snakes, they will probably lose the suit.

Luckily, most areas don't have snake populations.  If you have a pest problem don't try to hide it.  Hire a pest control service to eradicate the problem.  

Disclose, Disclose, Disclose

These are only some of the items that can create problems if you fail to disclose them.  Another common issue we see is having work done on the home without proper permits.  This is a situation that may even prevent the buyer from qualifying for their mortgage if the illegal work is discovered.

Sellers who haven't lived in the property are well advised to disclose everything they know.  If a tenant has lived in the home the seller will probably only know about things the tenants reported.  No one expects sellers to disclose things they don't know.  They must report anything they're aware of.  Make sure the property manager keeps a record of all repairs, improvements, etc.  They will be useful when selling a home long distance.

It is in your best interest as well as the buyers if you disclose all pertinent details.  This allows the buyers to have the problem inspected and make an informed decision about purchasing your home.  Make sure to avoid any pre-sale and staging tricks.   The buyers may not discover the issues during their inspection but they will when they move in.  Then you could be liable for much more than the cost of the repairs.  

Related Links

• What You Should Know About Seller's Disclosures by Teresa Cowart
• Selling a Home "As Is" by Greg Hancock
• 3 Home Improvements Sellers Should Avoid by Karen Highland