Home LoansMortgage

Here’s What You Need to Know About Seller Disclosures

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

If you’ve made an offer to buy a home, one of the first forms you’ll receive from the seller is the seller disclosure. This document provides the seller’s accounting of known problems with a home and is required in most states.

Seller disclosure laws vary from state to state but are designed with a common goal in mind: to add transparency to the real estate transaction.

In this article, we’ll cover:

What is a seller disclosure?

A seller disclosure form is a legally required written statement detailing material facts a seller knows about a home’s condition and the immediate surrounding environment. Different states may have a pre-formatted property disclosure form, also called a home disclosure form, required by law.

The point of a home disclosure is to give a prospective homebuyer a clear picture of the home’s known defects, both inside and out. The home disclosure also includes immediate environmental risks, such as a nearby nuclear power plant or landfill. The home seller has a legal responsibility to inform a homebuyer of anything that impacts the enjoyment, safety and habitability of the home.

What must be included on a seller disclosure?

State laws typically dictate what must be included on a residential property disclosure form. Generally, a seller is required to disclose a history of any past or present problems with the following items:

  • Date seller last lived in the home
  • Roofing
  • Basement and crawl space
  • Termite or pest infestation
  • Structural integrity of walls and foundation
  • Additions, remodels and structural changes
  • Water and sewage systems
  • Plumbing
  • Lead-based paint
  • Heating and air conditioning
  • Electrical systems
  • Soils and drainage
  • Presence of hazardous substances like radon or mold
  • Condominium or homeowners associations
  • Legal issues that could affect title
  • Any special items related to the property’s location (airport noise, well water access, earthquake zone, floodplain, etc.)
  • Mold or previous water damage issues
  • Criminal activity or death in the home

There may be additional requirements depending on where you’re buying a home and the property type. Here are some important things to look out for as you’re reviewing the seller’s disclosure statement:

Lead-based paint. The Department of Housing and Urban Development (HUD) requires sellers to disclose if they know that lead-based paint was used in a home built before 1978. Lead is a toxic metal that can cause severe health problems, especially for children.

Mold or water damage. A ruptured water heater or faulty water connection can cause flooding. Mold and mildew can spread quickly into ceiling tiles, wallpaper, carpets and drywall. Depending on your state’s laws, sellers may be required to disclose mold issues — if they know about them. Be sure to ask about the extent of past flooding, or mold and mildew problems.

Termite damage or treatment. Termites can cause extensive structural damage, and standard homeowners insurance policies generally don’t cover these claims. Past termite damage or treatment must be disclosed in accordance with the termite disclosure laws of your state.

Natural hazards. Sellers may be required to disclose natural hazards, such as proximity to an earthquake fault line or being near a river that’s prone to seasonal flooding. For example, California law requires home sellers to provide a natural hazard disclosure report that details whether a property is within a designated hazard area.

Floodplain location. Sellers are not required in all states to disclose whether their property is located in a federally designated floodplain by the Federal Emergency Management Agency (FEMA). As a buyer, you can verify this information by entering the property address on the FEMA Flood Map. Depending on the results, you may need to purchase flood insurance, and mortgage lenders often require it be paid as part of your monthly mortgage payment.

When should I receive a seller disclosure?

Most buyers receive a seller’s property disclosure form after the purchase offer has been accepted. In some areas, sellers may even provide the disclosure statement before an offer is made. Your real estate agent can provide guidance on when a seller is required to give you the disclosure form based on your state’s laws.

In some instances, a seller may not have to provide a property disclosure statement. Examples include foreclosure sales conducted by a sheriff or court, or an estate sale. In those situations, state law dictates what disclosures are required.

How can a buyer respond to a seller disclosure?

The basic idea behind a residential property disclosure statement is to fully inform a buyer of any flaws, so they can back out of an offer to search for a different home, negotiate a lower sales price, ask for a credit toward closing costs, request repairs or some combination of these options.

If there’s something in the disclosure that worries you, the best plan is to have your agent discuss it with the listing agent. Ask for extra details until you feel like you have enough information to continue with the purchase or back out.

The details in a seller’s disclosure statement can also help a home inspector pay closer attention to certain issues. For example, if the seller reveals that the basement flooded due to a plumbing leak in the past, an inspector can use that information to check for lingering mold issues or water damage.

What is the difference between a home inspection and home disclosure?

A seller disclosure reveals issues with the home that the seller knows about. In contrast, a home inspection is a written report from a professional home inspector that provides a detailed overview of the condition of a home. The homebuyer is responsible for hiring and paying the inspector, whose feedback is unbiased and objective.

Here are some issues a home inspector may uncover that a seller might not know about.

Component of home What a home inspector might discover
Structure Cracks in foundation, settling cracks
Exterior Property grading problems, water drainage issues
Roof A roof at the end of its lifespan or has damage that’s not visible from the ground
Plumbing Evidence of potential leaks, faulty seals, past repairs
Electrical Insufficient wiring, electrical panel access issues or broken ground fault circuit (GFI) outlets
Exhaust systems Insufficient ventilation in laundry rooms, attic and kitchen and bathrooms

What to do if a seller lies on a home disclosure

If you think a seller lied on the property disclosure statement, there are a number of steps you can take.

“First, I recommend contacting [your] real estate agent to reach out to the seller’s agent,” said Stephen Hachey, a Florida real estate attorney who runs his own law firm. “If the agents can’t resolve the issue between the buyer and seller, I recommend contacting a real estate attorney.”

Courts have a variety of ways to award damages if a seller loses a lawsuit over failing to disclose property issues.

“If the property can be restored to its original condition at a reasonable expense, damages should be equal to what it costs to make the repairs,” Hachey said. “If it costs more than the house is worth to renovate the home, the court may award damages for the loss of value.”

If you see a property being sold as-is, which is common for fixer-uppers or distressed properties, that doesn’t mean the seller is relieved of legal responsibility to provide a seller disclosure form. However, the seller is unlikely to repair any issues discovered in a home inspection, and you’ll need to cover repair or renovation costs out of your own pocket if you want the home.


Today's Mortgage Rates

  • 2.74%
  • 2.14%
  • 2.82%
Calculate Payment
Advertising Disclosures Terms & Conditions apply. NMLS#1136

Featured Articles