Property Disclosures
Buyers rely on accurate information about a property's condition, and the law increasingly requires sellers and agents to disclose known problems. This chapter covers seller disclosures, environmental hazards, and the limits of caveat emptor.
Seller Disclosure of Material Defects
Most states require sellers of residential property to complete a disclosure form describing known material defects, such as roof leaks, foundation issues, or system problems. A licensee must disclose known material facts that affect value or desirability and cannot help a seller conceal them. Failing to disclose a known defect can lead to rescission or damages.
Environmental Hazards
Agents should recognize common environmental concerns. Lead-based paint disclosure is required federally for housing built before 1978. Other hazards include radon gas, asbestos, mold, underground storage tanks, and contaminated water. The federal Lead Renovation, Repair, and Painting Rule adds requirements for work that disturbs lead paint in older homes.
Stigmatized Property and the Limits of Caveat Emptor
The old rule of caveat emptor (buyer beware) has been narrowed by disclosure laws. Some conditions, called psychological stigmas (for example, a death on the property), are treated differently from state to state, and certain facts such as a prior occupant's illness may be protected from disclosure by fair housing law. Agents should follow their state's rules and never misrepresent a property.