Understanding Disclosure and Its
Role in a Real Estate Deal


By Keith Loria

Is there mold in your home? What about termites? Do you have an old heating
tank buried in your yard? If you’re in the process of selling your home, it’s
necessary to disclose these problems—in most cases—to a buyer before a sale can
be completed.

While disclosure laws differ from state to state, in most cases, it’s against
the law to fraudulently conceal any major problems in your home. This includes
everything mentioned above to whether your basement floods during heavy rains
or if part of your foundation is crumbling.

Property disclosure plays a very important role in a real estate deal. Today,
it is almost standard for written disclosures to be included in the contract.
And when you sign one, it must be truthful. If not, you’re looking at costs and
possibly a lawsuit.

When it comes to property disclosure, you should always talk with your real
estate agent and/or attorney about what’s required to disclose. You can also
check with your town’s City Planning Department about local ordinances and
disclosures that can come into play.

Generally, you’re only responsible for disclosing information that you
personally know about, so it’s not necessary to hire an inspector to come look
for problems regarding conditions that weren’t brought to your attention when
you purchased the home.

However, some states do require more investigation on your part. In fact, there
are laws on the book in certain states that require a homeowner to search for
some of these major problems—especially mold and lead paint—whether you see
problems or not.

In California, sellers are required to disclose any possible risk that could
result from natural disasters, such as the home being in a flood plain,
earthquake zone or its susceptibility to wildfires. A disclosure like this will
enable potential buyers to understand the financial risk and danger they could
face, plus warn about problems they may experience in buying insurance for the

If you’re buying a home, regardless of your state’s laws, you should demand a
disclosure statement be part of the contract. This will protect the buyer in
case something shows up after the sale.

Asking a seller to disclose material facts means you’re asking them to disclose
anything they know about the house that might be problematic. While you can’t
force someone to sign a disclosure (again, depending on the laws in the state),
you always have the right to leave any deal, and you might end up forcing a
buyer’s hand.

If a seller does refuse to sign a disclosure, and you still want the house, it
should send up a red flag that something might be wrong. This should encourage
you to invest a little more when it comes to an inspection and do your due
diligence about the neighborhood. In the end, it’s better to be safe than sorry
when it comes to making sure the home of your dreams doesn’t turn into a

To learn more about disclosures, contact our office today. 

Reprinted with permission from RISMedia. ©2013. All rights reserved.