In most states, and certainly in Pennsylvania, where I live and work, the property Seller’s Disclosure must be supplied by the seller and signed and initialed by the buyer. Its purpose is to ensure that the seller has disclosed any known defects in the house or property and that the buyer is aware of them. However, many sellers ask, “Do I have to disclose that I fixed a leak?” or “My insurance took care of it when the tree fell through the roof, so do I need to disclose that?” The answer is yes!
Why disclosure benefits the buyer
There is little mystery surrounding why disclosure of defects, repairs or other issues that could negatively affect the salability of the property is beneficial to a buyer. Who wouldn’t want to know that there was shifting in the soil, causing the retaining wall to lean? or termite damage to the basement joists? or that the heat was installed in 2003? This information helps educate the buyer as to what costs might be upcoming as well as what things to ask a home inspector to give special attention.
Why disclosure benefits the seller
Disclosing any issues with the house or property is good for the seller, too. Why?
- A buyer doesn’t have much recourse as far as asking for a repair or credit for any item you’ve disclosed.
- It can prevent you from being sued later. If a buyer purchases the property, moves in and discovers something wrong that he or she feels you knew about but did not disclose, a lawsuit is likely.
- It provides comfort to the buyer that you are not hiding anything. This good faith can go a long way in creating a smooth transaction. In this vein, put yourself in the buyer’s shoes (where you are likely to find yourself if you are selling your current home)–how would you feel if a seller knew about a problem and tried to cover it up?
Can’t disclosure hurt the seller?
There are people who worry that disclosing “too much” can make the property seem in poor repair. That concern is not unreasonable. But guess what? If that seems to be the case, then the seller either needs to make some repairs or offer credits, or at least acknowledge that there are some issues. Regardless of whether the seller discloses them, an inspector is sure to find them. So the condition of the property won’t remain a secret for long. And if a buyer doesn’t do an inspection? Remember, once the new owner has taken possession, he or she can still sue a seller for lack of disclosure, even if no inspections occur. There is no scenario in which withholding information makes sense (or is legal). So, disclose, disclose, disclose!