The Importance of Property Disclosure Statements
When buying a house, you want to make sure that there are no unknown problems that could turn your investment into a money pit. That’s exactly why, in most states, a property disclosure statement is put in place and is required to be signed by both parties prior to the completion of sale. With the intent of putting the purchaser at ease of their new investment, this real estate disclosure statement is legally binding and should be taken very seriously by both the buyer and seller.
With such importance in the home buying process, what exactly goes into a real estate disclosure statement? Who is responsible for creating this important document and what is required to be stated in this disclosure agreement? If you are currently in the process of buying or selling a house and have not considered the property disclosure statement, here’s what you need to know to ensure everyone is on the same page before the property is sold.
Disclosing Important Items
So what exactly is a property disclosure statement? Simply put, it’s a legally binding document that describes everything associated with a property, especially items that could cost the buyer money down the road. It is up to the seller to craft this statement, as they have all of the information on the property that the buyer will eventually be purchasing.
Items ranging from large scale issues like old plumbing systems and roof leaks to smaller problems like pets that have lived in the home can be disclosed in this statement. All liens and judgments should be listed, as well as any neighborly disputes or previous pest problems. Additionally, fiduciary information such as conflicts of interest should be included.
Anything that could impact the buyer’s decision or the future price of the house should be disclosed by the seller in order to provide the purchasing party with a detailed and factual representation of the property. The seller should include any information on improvements and renovations to the property, whether they are finished or unfinished, permitted or unpermitted.
Statements Vary From State to State
Every state has their own guidelines and requirements when it comes to disclosure agreements. In states like North Dakota and Arkansas, it is not required to have a disclosure statement when purchasing a property. Certain states have specific items that must be disclosed, such as Washington requiring the seller to state if the property is in close proximity to a farm.
It’s important to be aware that in these states that do not require a disclosure statement, the caveat emptor rule is in effect. Otherwise known as the “buyer beware” rule, all responsibility is placed on the purchaser of the property to obtain information on each issue or problem with the house. If you are currently looking to purchase property in a state that does not require a disclosure statement, make sure to do your due diligence to obtain all of the information yourself that would typically be disclosed in one of these agreements.
Fortunately, inspections and appraisals are also part of the purchasing process. These further steps ensure that the buyer is purchasing a property that does not contain any issues that they are unaware of when buying the house. If worried about the seller not disclosing important items, the buyer can always order specialized inspections that will discover any potential issues.
When buying or selling a house, it’s important for both parties to be on the same page regarding the current status of the property. While real estate disclosure statements can clear up a lot of the confusion and issues with a property, it is ultimately up to the buyer to know exactly what they are purchasing. For more information on buying or selling real estate, contact Andrew Cartwright today.
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