What Is a Seller’s Disclosure?

When you make an offer on a home, one of the first pieces of paperwork you’ll get is a seller’s disclosure. Also known as a “property disclosure statement,” this document contains a list of known problems with the home.

Most states require some kind of seller’s disclosure statement as part of the home sale process to protect buyers from facing nasty surprises after closing. And, even in states where it’s not required, a buyer can request a seller’s disclosure.

How does a seller’s disclosure work?

What it is: A seller’s disclosure is a document — in many cases a standard form — that lists anything known about the property’s condition that could negatively affect its value. In most cases, sellers are only required to list “known” defects, not to do research into all of the characteristics of their home listed on the form. That’s why, as a buyer, you should still get a home inspection before making a final decision.

When you get it: As a buyer you’ll typically receive a seller’s disclosure after you make an offer to purchase a home. However, the exact laws and practices around seller’s disclosures vary depending on where you live.

In some states, every buyer who submits a written offer will be given a seller’s disclosure. In other areas, it’s common for buyers to not see the seller’s disclosure until right before the home is under contract.

When it’s not required: In some states, no seller disclosure is required. And even in states that normally require disclosures, there can be exceptions. For example, you may find that disclosures aren’t required for new homes that have never been lived in, or for foreclosure sales.

Your real estate agent can tell you about local disclosure laws. You can also read up on the disclosure requirements in your state online.

What about property that’s sold “as-is”?

Even a property being sold as-is still needs a seller’s disclosure if it’s required in that state. However, it’s unlikely the seller will fix any additional issues uncovered by a home inspection if they’re selling the house as-is. This means you’ll need to cover the renovations yourself, or take out a home improvement loan to finance those costs, if you buy the home.

What’s in a seller’s disclosure?

Many states provide a standard seller’s disclosure form, which lists all of the property features the home seller needs to report on. In that case, a seller can just go down the list checking boxes or providing short answers.

In states that do require a seller’s disclosure, a seller will typically be expected to disclose known issues in the following categories:

• Structural features like the foundation or roof
• Mechanical systems like electrical, water and heating
• Natural hazards like floods, earthquakes or wildfires
• Environmental hazards like mold, radon or asbestos
• Zoning issues like school districts, transportation projects or land use regulations

However, a lot more may be included, depending on your state. California, for example, has some of the strictest disclosure laws in the country and requires sellers to disclose extra information about:

• Excessive noise in the neighborhood
• Deaths that took place in the home
• Registered sex offenders in the area

Below, we’ll cover eight commonly required disclosures in more detail.

Roofing

Sellers will likely be asked to provide the age of the roof, to the best of their knowledge. Some common ways to find out how old your roof is include communicating with the previous owner, seeking out building permits and receipts from the roofing company or getting an estimate from a home inspector.

A few typical disclosures:

• Whether the roof has ever leaked
• Whether it had been repaired during the seller’s ownership
• If the roof is warrantied and whether the warranty is transferable

Other requirements will vary by state. For example, California sellers must disclose whether a roof has features that “may make the home vulnerable to wildfire and flying embers,” such as rain gutters without metal or noncombustible covers and combustible landscaping within five feet of the home. In Alaska, the seller’s disclosure form asks whether ice dams have ever formed on the roof.

Basement and/or crawlspace

Moisture is a major concern in these areas of the home. Sellers may need to disclose whether a sump pump was installed or if any other repairs or preventive measures have been taken. It’s also common to disclose issues like previous flooding or seepage that results in standing water in the basement.

Structural integrity

Requirements vary, but may include:

• Whether the structure was altered, such as remodeling, adding a room or changing the roof
• Movement, shifting and/or deterioration in foundation or walls
• Problems with use/operation of windows
• Rot/water damage, fire/smoke damage
• Termites, rodents or pests
• The presence of asbestos

Plumbing and water/sewerage systems

The seller must usually disclose whether there were any problems with or replacements of these systems. The seller’s disclosure might also require more specific information to answer the following questions:

• When was the septic system/cesspool last serviced?
• Are the pipes made of copper, PVC or lead, or are they galvanized?
• Are there any problems with any plumbing fixtures or the water heater?
• What is the drinking water source? If it’s a well, when was the water last tested?
• If public sewer system service is available, is the home connected and if not, why?

Soil and drainage

When it comes to soil, most seller’s disclosure forms cover similar topics, such as soil-settling issues, improper grading, the presence of debris burial or filling or potential contamination by chemicals.

Sellers may also have to disclose situations specific to their regions, however. For example, some parts of Pennsylvania have “mine subsidence” issues: ground movement due to shifting/collapsing mine tunnels. The state’s disclosure form lets potential buyers know where to find subsidence maps, to see if the property might be affected.

Heating/cooling and electrical systems

Again, some states simply ask the seller whether any problems are known to exist in these systems. In other places, however, the seller’s disclosure may ask very detailed questions, such as:

• Do the systems run on electricity, fuel oil or natural gas? Does the property have wood heat or solar panels?
• Are there central air or window units that will be included in the sale?
• Are there any areas of the home that aren’t heated?
• Does the house have working fireplaces?
• Are (or were) there fuel tanks on the property?

Location-specific disclosures

Anything that can affect the value or desirability of the property could come into play here — for example, being the scene of a crime or having a reputation for being haunted. That said, what each state requires a seller to disclose can vary quite a bit.

Most states don’t require sellers to disclose deaths that occurred on the property unless the death was violent. However, the seller must be truthful if asked about deaths on the property, unless state law allows them to say that they don’t wish to answer.

Certain regions have unique disclosure issues. In Hawaii, sellers must disclose tsunami, geothermal or volcanic hazard zones, as well as the possibility of noise from frogs. Alaska sellers must specify whether the property is in an avalanche or mudslide zone.

Some other types of location-specific disclosures:

• Trains, airplanes, racetracks and other noise-producing situations
• Waste disposal sites
• Gravel pits
• Designated wetlands
• Agricultural districts

Condo or homeowners association rules

Sellers whose home is part of a homeowners association (HOA) usually have several very important issues to disclose:

• Whether membership in an HOA is required as a condition of owning the property
• What types of fees, surcharges or special assessments are generally required
• Whether certain features (such as walls or roads) are shared with neighbors, since their use or maintenance could affect the property being sold

Understanding the rules associated with a condo or HOA is very important, as they can drastically limit how you use your own home.

Red flags to look for on a seller’s disclosure

• “No representation.” In some states, a seller is allowed to avoid giving information about a feature of the house by writing “no representation” on the seller’s disclosure. “No representation” means that the seller makes no claims about that aspect of the house, but can also signal that a seller wants to avoid discussing a problem area.
• Lead-based paint. Lead is toxic and can lead to serious health issues, especially in children. Federal law requires disclosure of lead-based paint being used in a home built before 1978.
• Termite treatment or damage. Left unchecked, termites can seriously damage a home’s structure — and standard homeowners insurance policies ­typically won’t cover damage done by insects.
• Mold or water damage. A plumbing problem or history of flooding can invisibly set the stage for mold and mildew. Both can spread into wallpaper, rugs, drywall, ceiling tiles and even damage the home’s foundation. Depending on the laws in your state, a seller might be required to list these issues on the seller’s disclosure form — if they know about them, that is.
• Natural hazards. Not every state requires sellers to disclose that their property is part of a floodplain or near a fault line, but many do. For example, in California, a seller’s disclosure must include whether the property is within a “designated hazard area.”

Tip: Check whether a home is located in a floodplain

If your state doesn’t require sellers to disclose this information, you can easily check for yourself by using the FEMA Flood Map. Depending on what you learn, it might be necessary to get flood insurance.

Seller’s disclosure vs. home inspection

A seller’s disclosure form lists issues known to the homeowner, while a home inspection is a report written by a professional inspector, detailing the home’s overall condition. The potential buyer, not the seller, hires and pays the inspector. In return, they get an objective report on the home’s condition.

It’s common for buyers to write a “contingency” into their purchase contract that allows them to walk away if something troubling comes up in the home inspection. Without that contingency, a buyer could have a tough time backing out of the contract.

Here are some examples of home issues a seller might not be aware of that an inspector could find:

What happens if the seller lies?

If you think the seller hid information or lied on their seller’s disclosure, you have several options. First, start by asking your real estate agent to talk to the seller’s agent. If they can’t negotiate a solution, you can enter mediation with the seller or you can meet with a real estate attorney to explore a lawsuit. In some states, the law requires you to try mediation (or another method of dispute resolution) first, before going to court.

Although mediation typically takes three to eight hours, and can cost hundreds of dollars an hour, it’s often your best option. Going to court could take years and cost tens of thousands of dollars, with no guarantee of success.

What happens if you sue and win?

If mediation doesn’t work for a real estate disclosure dispute, then a lawsuit might be the next step. Should the seller lose the case, the court has several ways of making things right for the buyer:

• Fixing the property. The court might award you enough in damages to cover the repair. But even if the damages only cover part of the repairs, it may make sense to accept the result and cover the rest yourself.
• Awarding other damages. A court might require the seller to pay “loss of value” damages if the seller’s failure to disclose information about the home significantly affects the home’s value.
• Rescinding the sale. It’s possible the court might cancel the sale if the seller misrepresented the home or otherwise violated the statute requiring disclosure.