Knowing what the law says about disclosure is an important part of the real estate sales process. You need to be aware of what you are expected to disclose to potential buyers, both to avoid breaking any laws and to help you better plan your sales process.
Generally speaking, you want to be honest about the state of your home . While there is no need to paint it in a bad light – what you think is a problem may not be for the right buyer – an honest assessment of the positives and negatives of the property tends to make things easier for both buyer and you.
Things To Disclose about Homes For Sale
Quite often home sellers will ask real estate agents what do I have to disclose when selling my house? Although the answer really varies from state to state, here is a reference for items applicable to Texas. Let your REALTOR do his homework and rely on him to guide you regarding the disclosure laws in. Below is a review of some of the more popular disclosure issues.
Lead
The federal government requires that homeowners make it known if a property contains lead-based paint if the home was built before 1978. You may have received a pamphlet about the risks of lead paint when you bought the home, or when you were a renter at some point. As a seller, you will need to provide the same pamphlet to buyers, and allow them to test the home for the presence of lead within a 10-day period. Disclosing the possibility of lead paint is a federal regulation. It is just about the only disclosure issue that applies to every state in the United States.
Repairs and renovations
Major repairs and renovations must meet building code requirements in your area. When the home inspector goes over the house, he or she will most likely notice any repairs that have been done, so it is good to be prepared with documentation that all the work done to the home is up to code before you try to sell the home. Plenty of home sales have fallen through due to shoddy repair work, so avoid any problems by having all the paperwork in order.
Mold
Any known mold issues need to be reported as mold can cause serious health issues for many people. Flooding in Houston recently is going to potentially result in mold in homes there that needs to be remediated, documented and reported on the seller's disclosure report. Mold remediation specialists can help with remediation and you should still be able to sell your home even if you discover mold and avoid legal troubles as long as you disclose it.
Square footage
Square footage or gross livable area (GLA) of the house is something that is readily available on the county appraisal district websites. When you list your home on MLS, the source of the size of the home needs to be listed along with the size of the home. If you have already had an appraisal recently, an accurate measurement should be available on your report and you can use it on your listing.
Remember that the buyer's lender will order an independent appraisal of the home which will include measuring the home again.
Legal problems
If there are any known legal issues with the home currently in court, try to resolve them before listing your home. If the home is a short sale, probate sale or estate sale, that should be disclosed to the buyer up front.
Homeowners Associations
If you live in a neighborhood with an association this should be disclosed up front to potential buyers. Your HOA is an important part of your property, dictating a variety of things about living there and about ownership. Any buyer is going to need to know about the HOA and its requirements before purchase.
An informed buyer will ask questions about the state of the HOA, how it handles problems and its financial stability, so it can save you time to gather all this information before you start meeting with buyers.
Termites
Termites and other pest infestations are going to be noticed by any good home inspector and are hard to hide. Even if you have already had the problem fixed, there will most likely still be evidence that there was a problem at some point in time. As the seller, you want to be ahead of the game and have all your information ready to explain the termite problem, how you dealt with it and why it is no longer a worry for any potential buyer. Get documentation from whoever treats for the pests and have it ready as you go to sell.
Major issues with the home
Things like the roof, foundation, walls, plumbing, electrical system and other fundamental features within a home are supposed to be in good working order. After living at your home for a while, sellers may realize they have issues but just don't have the funds to fix them or think nobody will find out.
Insurance claims
If you have filed any home insurance claims and have received any funds towards repairs like roof hail damage or water damage, make sure that you disclose this information. And be ready to provide receipts for the repairs made to the potential buyers. Any filed or open home insurance claims are readily available to potential home owners through a CLUE report that can be generated by an insurance agent.
Seller's Disclosure Forms in Texas
The TREC Seller's Disclosure of Property Condition form is essentially a copy of the statutory minimum information set out in the Texas Property Code. Texas Association of REALTORS® attorneys recommend that Texas REALTORS® use the TAR Seller's Disclosure Notice, which has additional provisions to increase the information provided to buyers. This additional information is designed as a risk-reduction tool for sellers and as an information source for buyers. Some local REALTOR® associations also offer a disclosure form.
Exceptions in Texas Seller's Disclosure Requirements
The seller's disclosure notice statute contains 11 narrow exemptions. You're not likely to come across these situations frequently. The most common of these exemptions apply to:
A builder of a new home
A trustee or executor of an estate
The lender after foreclosing on a property.
Even though these types of sellers (and a few others) are not required to provide a disclosure notice, they still must disclose any known material defects. For example, if an inspection report reveals material defects, the seller and broker are obliged to disclose those defects. Therefore, a lender who knows about a cracked foundation in a property that the lender acquired through foreclosure must disclose the defect to any buyer who purchases the property from the lender. The means of disclosure is not mandated.
When it comes to disclosing the issues you should know about, speaking with the seller on the history of problems is not a bad idea. Any great real estate agent should know the disclosure laws for their area. He or she should be able to assess what the real issues are – which need to be disclosed – and the issues that are not as important. Decide on how you will present the information to be honest and accurate, while avoiding the tendency to present the home in a bad light.
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About Nitin Gupta:
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