What is a Disclosure Statement in Real Estate?A disclosure statement is legal protection for the buyer in which any flaws and issues are revealed before purchase. The seller of the house is required to list any issues that may affect the buyer’s choice to purchase, especially in the case where repairs may cost high amounts of money. The statement should include any records of water damage, termite damage, mold, or anything related. It can also range from listing previous pets that have been on the property. Anything that may come back to bite in the future, the seller must list anything they are aware of. Otherwise, it may come up during the home inspection. When the time comes for the documents to be signed, it is the seller’s job to collect every scrap of information they can find relating to the property in question. The seller presents all the documents to the buyer for disclosure, and the buyer must sign the papers in question. This should be handled long before closing! During the closing process, it is in the buyer’s interest to not skim through the paperwork. All signatures are legally binding, meaning you are acknowledging any and all issues. Even though the process is lengthy and extensive, slow and steady wins in the long run.
Common Disclosures in CaliforniaCalifornia has some of the most strict disclosure agreements in the entire country. Common disclosures you might expect to encounter during disclosure signing include but are not limited to:
- Natural Hazards Disclosure Statements
- Market Condition Advisories
- State Transfer Disclosures
- Local Transfer Disclosures
- Megan’s Law Disclosures (sex offenders in area)
1. Termite DamagePerhaps every buyer and seller’s worst nightmare is the discovery of these tiny pests. If the house has been treated in the past, the seller must show proof (along with the receipts). In most cases, a termite inspection is a necessary task that must be completed before closing. It would not be wise to try and hide such damage, as pest control will eventually find it!
2. Water DamageAnother extremely common type of property damage is water damage, especially in older homes. In some cases the seller may not have any foreknowledge of the damage, yet in some cases it can be conveniently covered up. If any such destruction has already taken place and is intentionally hidden, the buyer has the right to ask the seller to make repairs as long as the sale has not been completed.
3. Death on the Property in QuestionThere is no doubt someone would want to be notified of any deaths on the premise of their soon-to-be home. Some states have made this disclosure mandatory. In reference to the safety or condition of the home in question, any deaths must be disclosed. Any violent crimes must also be made known. Each state differs in their laws on this basis.
4. Unpermitted WorkUnpermitted work describes construction on site that has not been approved by the city via a permit. Whether this is because it was done under the table, or the right requirements were not met, or the city is simply unaware of what work transpired, it is up to the seller to disclose all unpermitted work. Not all unpermitted work is necessarily bad, however it is better to be safe than sorry, especially when contracts are involved. Even if it is the previous owner’s fault, the seller is responsible for any damage or repairs as a consequence.
5. Mold DamageMold on property is dangerous as it erodes and decays the stability of a house, and is also harmful to one’s health. Mold gone untreated can only bring extensive damage. It is up to the seller to make sure all repairs are accounted for, unless the buyer is willing to make amends themselves. There are numerous situations that arise in the subject of property disclosure. Don’t let these disclosures be the cause of delay on moving into your new home! Our blog can help with more information on how to prevent further delays. As aforementioned, honesty wins. As a seller, this will incur a reputation that cannot be tainted. Have further questions regarding disclosures, escrow, buying or selling? Contact New Venture Escrow for more information!
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