Seller’s Disclosure
What is a Seller’s Disclosure
According to nolo.com, “A New Jersey home seller has a duty under the common law to tell prospective buyers about known, latent (concealed) material defects in the property”. However, a seller’s disclosure is an optional (not required) document, that gives information about the home’s condition and history. Due to this fact, not all listings are accompanied by a seller’s disclosure. (Here is an example) Additionally, there are different variations of this form based on the real estate company listing the property.
A seller’s disclosure is the only document that the Realtor is not allowed to help fill out. We can clarify questions, but unlike other forms that we typically fill out and have the owner(s) sign, a seller’s disclosure must be filled out soley by the owner.
Why Homeowners Fill Out Seller’s Disclosures
Some companies, such as mine, encourage homeowners to fill out a seller’s disclosure for transparency. It is really a way to protect ourselves since not only do the sellers and the sellers’ agent sign the document, but the buyers and their agent have to sign it as well. If in the future a buyer comes back and claims we didn’t tell them about a known issue which we disclosed, they have no standing.
In some areas seller disclosures are more popular than others and sometimes buyers are suspicious when the there isn’t one.
My Advice To My Sellers
My company encourages homeowners either fill out a seller’s disclosure or sign a waiver stating there is no disclosure. We do this to legally protect both us and our clients.
I tell my sellers to be honest, but never to guess/estimate at information. I mention they can pull an OPRA (open public records act, which shows all the dates of permitted work done on the property) to ensure any dates they put down are accurate. (It is very easy for 15 or 20 years to only feel like 10 years when a owner has lived in a home for decades.) I also recommend that it is better to check “unknown” than accidently give inaccurate info.
Seller’s disclosures are especially important in situations where there is a known issue (such as a basement that gets water/ any flooding claims submitted to insurance) or an issue that was corrected (such as a tree fell into a roof which was repaired).
Especially in this market, disclosing information and having the buyer sign off on it will not only protect the seller from litigation after the sale, but in many cases saves them money during the sale process. Many issues and signs of repair are found during home inspections and title searches. By being upfront about this information, buyers can’t claim they were unaware. This reduces the likelihood of the buyer asking fora credit while under contract.
If my seller truly does not feel comfortable filling out a disclosure then I have them fill out a waiver. There are even times I suggest my client sign the waiver instead, such as estates sales, where the seller hasn’t lived in the home and in some cases might be unfamiliar with the property.
Advice to My Buyers
A seller’s disclosure is a helpful tool but it is not gold. Sometimes listing agents will print a disclosure and will hand it to my home inspector. I politely thank them for the information and take the report because my home inspectors will be the first to tell you they need to do an independent inspection.
I always review the seller’s disclosure of any property my clients are seriously interested in. I can think of two specific examples where the seller’s disclosure prompted me to ask additional questions before submitting an offer. One mentioned a “sink hole” which was really a spot where they removed a tree two years prior and the dirt had settled. The other referred to “fuses”. Since some fuse boxes are viewed as fire hazards and insurance companies will not grant a policy in homes where they are used, I obviously investigated further. In that case, it was an estate and the seller made a mistake, in reality the home had circuit breakers.
It is easy for a home owner to give false information. Yes, I am sure some sellers are deceitful, but in many cases, especially in homes occupied by the same owners for decades, or an onwer who didn’t live at the propery, they are innocent mistakes. My suggestion is to of course always read a document you are signing and follow up on any cause for concern, however do not rely on the seller’s disclosure. There is a reason we pay for a home inspection and title search. I also always recommend my buyers pull an OPRA.