| DISCLOSURES
Q. What is the seller obligated to disclose to the buyer?
A. Disclosure is covered or not covered by state law. In other
words, disclosure is treated
differently among the states.
Some states require sellers to fill out a long form that explicitly asks
about the seller's
knowledge of various material defects that might be present in the home.
For example, the form
might ask the seller if he or she is aware of any material defects in
the basement, leaks in the roof, unsafe concentrations of radon gas, etc.
Another form might specifically question the condition of various parts
of the home, such as the age of the roof, whether the home contained insulation,
etc.
In other states, sellers are not required to fill out disclosure forms
but are required to disclose any defects in equipment that should be functioning
at the time of sale such as the furnace, central air conditioning, the
hot-water heater, etc.
Most states, however, do not require disclosure. Thus, in most states,
the phrase caveat
emptor - or buyer beware - prevails. Unless the buyer asks specific questions
about defects, the seller is not required to disclose them even if he
or she has specific knowledge that one or more substantial defect exists.
As a result, any problems discovered by the new owner after the sale is
closed are his or her problems. The moral? As a buyer, when in doubt,
ask.
As a seller, you may want to disclose known material defects that seriously
affect the
home's value even if your state does not mandate such disclosure. This
will help you avoid any
future legal problems involved with the sale of your home. Many of the
lawsuits filed about realestate transactions involve the seller's misrepresentation
or failure to disclose. Responding
honestly to the buyer's questions and either repairing material defects
or disclosing them is an
effective way to avoid future litigation.
Q. What are the real estate agent's obligations with respect
to disclosure?
A. The Code of Ethics of the National Association of Realtors
governs real estate firms and agents
who are members. This Code calls for disclosure of all known pertinent
facts about the property.
Members also will try to get all the buyer's questions answered. For example,
if the buyer has
spotted water damage in the basement, a member agent should ask the seller
about it and tell the
buyer about the cause of the problem.
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