Ask Judy O.: What do I need to disclose to buyers?

Hi Judy O.: I am planning to sell my home soon and am wondering if I need to disclose that I was burglarized last spring?

Answer: Yes.  Any information that would effect a buyer’s decision to purchase your home needs to be disclosed.  This extends to providing information about the immediate neighborhood as well.  Lawsuits that are generally brought against a seller relate to non-disclosure, i.e., fraud.  Even if it wasn’t the seller’s intention to withhold information and inadvertently did, they could leave themselves vulnerable to a lawsuit.

When I give a seller all the basic disclosure information to complete, I strongly suggest that they prepare an addendum detailing all the work done on their home during their ownership i.e., any idiosyncrasies about the house, any problem neighbors, etc and have their house file available to the buyer for review during inspections.

Here is a good example of what I mean:  When a seller asks “Why do I need to disclose that there was a water damage from a clothes washer overflow if the floor is now fixed,?” I tell them that all property history is relevant.  Assume, for example, the water damage wasn’t disclosed and the buyer subsquently discovers a latent mold problem in same area that becomes quite costly to fix.  If it can be traced to the water damage you repaired, but may not have been remediated properly, you the seller could end up in a lawsuit for not disclosure of the washer overflow.  On the other hand, if the information is disclosed at the outset of the transaction, then the burden is on the buyer to do their investigation and the parties can deal with it at that time.

My best advice to sellers is Disclose, Disclose, Disclose.  Have the disclosures available during the marketing period before an offer is made.  You might say “Won’t that run the risk of turning off a potential buyer.”  My response is two-fold:  (1) If a buyer is nervous with any of the information before getting into escrow, then you know they are probably not the buyer for your home and will not make it through inspections.  It’s a way of vetting a buyer  (2)  Information that is provided early when the house is being marketing—during the “falling-in-love” phase–is absorbed more easily by a buyer and builds a good faith relationship between the parties.  Surprises–well into an escrow–are the bane of any transaction.

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