Disclose! Disclose! Disclose!

Are you selling your home? Are you asking yourself questions like “Do I need to disclose this?” If you are uncertain, then the answer is probably “yes.” It is best to err on the side of caution. Not only is this the ethical thing to do, but it protects you as well. Perhaps filling out nine or more pages of disclosure is a hassle, but it is well worth the trouble.

All REALTORS have “war” stories about undisclosed items. I have one myself. In this case, I was representing a Minneapolis home seller who provided written disclosure about a small crack in a block concrete wall. It was not a huge crack. The property sold and closed. A few days later, the buyer decided that he was not very happy about that crack, and acted like he was surprised to see it. He called me up and threatened litigation against the seller. I pulled the disclosure out of the file, and read to him the very paper that he had signed. We never heard from him again. This was a “war” story that had a happy ending for my client.

The vast majority of real estate transactions have happy endings. The home sellers have dutifully described defects or other issues that might affect the buyers’ ability to enjoy their new home. If there was a city-mandated pre-sale inspection, the report was prominently displayed at the property. The buyers hired private inspectors. There were no surprises.

The following is a list of common real estate disclosures, along with a few notes on each. Please note that this post is for information purposes only. If you are uncertain about the legal sufficiency of disclosures for any property, please consult a real estate attorney.

Seller’s Property Disclosure Statement

This is a disclosure that satisfies the requirements MN Statutes 513.92 through 513.60. The seller has a duty to disclose any adverse conditions in the property. All sellers are subject to this disclosure requirement, but there are a few exceptions. Not all sellers are required to fill out this form. To determine if you qualify for an exception, examine the list exceptions on page nine of the Sellers Property Disclosure Statement. If you are unsure, consult your real estate attorney. Please note that this document is not a warranty or a guarantee of any kind. Sellers and agents make no such representations. A private inspection is a good idea.

Here are just a few items that this disclosure addresses:

• Encroachments, easements, restrictive covenants
• Location on 100 year flood plain
• Structural changes to home
• Water problems in basement, crawl space, or slab, mold
• Roof leakage and water damage
• Presence of human remains
• Property tax status or preferential property tax treatment
• Environmental concerns
• Defective appliances, mechanical systems, electrical systems, plumbing

Not all items need to be disclosed. Here are a few examples:

• The owner or previous owner has been diagnosed with HIV or AIDS
• Suicide, accidental, or natural death
• Paranormal activity
• Proximity to any adult family home, community based residential facility

Compensation Disclosure

The buyer’s broker uses this form to disclose the amount of compensation he will receive from the seller or seller’s broker, or the buyer.

Well Disclosure Statement

Sellers must disclose the presence of any wells on the property. The seller also provides a map to depict the location of each well. Also, the seller discloses if the well is in use, not in use, or sealed.

Private Sewer System Disclosure Statement

The seller must disclose the location and status of all known sewage treatment systems. I would still recommend having a private septic inspection. Septic system requirements vary from location to location. You may want to contact the County Sanitarian/Environmental Dept to find out more. You want to ensure that the septic system is in compliance.

Arbitration Disclosure

See Arbitration.

Common Interest Community Re-sale Disclosure Certificate

See Townhome and Condo HOA

Disclosure of Information on Lead-based Paint and Lead-based Hazards

Every buyer showing an interest in a home built prior to 1978 must be notified that the property may contain lead-based paint. This disclosure also gives the opportunity for the seller to share any inspection reports he may have that indicate the presence of lead-based paint. The form is also used to document the fact that the potential buyer has received a pamphlet which explains lead-based paint hazards in detail.

Possibly related posts:

1. What is “Arbitration?”
2. Minneapolis Truth-of-Sale-in-Housing Requirements