Sellers Disclosure Statement a Win Win Document for Buyers and Sellers
A Sellers Disclosure Form is a document which details items that need to be repaired, material facts about the property, and other factual information which could negatively impact the financial value of the property. This is a binding legal document when executed properly by the parties to a contract.
Why on earth would any seller want to disclose negative information about their home?
The big reason can be found in the courtroom. Juries have awarded big settlements to buyers suing sellers after they find “hidden defects” in the home, which the seller covered up or intentionally forgot to mention. By disclosing these problems up-front, the seller has put the burden on the buyer to carefully inspect these areas and evaluate their future negative impact on the property.
“Why do I need to fill out another form?”
is a question I am often asked by sellers when they list their home for sell. An easy answer is “because you have to.” The real answer is:
because you are protecting yourself against all kinds of problems down the road – problems that can pop up years after you have sold and closed your home.
Buyers benefit from the inclusion of a Sellers Disclosure Statement in the contract agreement in a much more obvious way. By carefully reading this document, a buyer can obtain factual information about a property that would not typically be available from a visual inspection. Buyers then have an opportunity to make an informed purchasing decision, to budget for work that needs to be done on the property, or seek expert counsel on particular disclosed zoning or legal matters.
A word to buyers: If the seller does not provide a Sellers Disclosure Statement, write a clause in the sales agreement specifying that a Sellers Disclosure Statement be completed by the seller and specify that this document is a part of the sales agreement. See a real estate attorney or your Realtor for assistance in wording this clause.
And, don’t forget to hand the Sellers Disclosure Statement to your independent home inspector. They need to know what the previous homeowner included so they can thoroughly investigate any areas of concern. On the whole, a Sellers Disclosure Statement protects both sellers and buyers. “Caveat emptor,” or “Buyer Beware,” is not a win – win way of doing business. All parties benefit from a more forthright and agreeable way of negotiating the purchase of a home.
What type of information is included on the Seller Disclosure Form?
- Identification of the property: Includes determination of the owner’s occupancy of the home.
- Questions about the Soil Trees, Shrubs and Boundaries: Includes questions about landfills, sinkholes, settling, dead trees, and boundary line matters
- Questions about Roof, Gutters and Downspouts: Identifies the approximate age of the roof, any past leaks, and gutter and downspout issues
- Termites, Dry Rot, Pests and Wood Destroying organisms: Discloses information about potential dangers to the home. This is the main section for researching termite infestation and damage.
- Structural Items and Alterations: Includes important information about movement, shifting, settling, deterioration, and other structural problems with the property. There are also questions about additions, structural changes, and major alterations to a property. Additionally, questions about stucco, driveways, patios and retaining walls appear.
- Drainage, Flooding and Moisture: Includes questions on any problems caused by water. You’ll also find some important questions about mold in this section
- Plumbing related items: Determinations of Septic tanks vs. public sewer for waste water treatment, past plumbing leaks and repairs, and questions about polybutylene pipe in the home.
- Other Systems and Components: Includes information on the heating and air conditioning, the water heater, and any wiring issues.
- Toxic Substances: Discloses presence of asbestos, radioactive substances, mold, and other problems.
- Covenants, fees and assessments: Includes questions about Home Owners Associations and binding property covenants.
- Other Matters: A catch-all section where a history of insurance claims, litigation involving the property, and general repairs are probed.
- Fixtures: Specifies what items are actually included in the sale of the property. Does the dining room chandelier go with the property? Is the refrigerator included in the sale? Look in this section for a detailed listing of what is and is not included in the sale of the home. A handy checklist makes it easy to fill out and read this section.
- Lead Based Paint: Discloses the existence of lead based paint on the property. Georgia Law makes this disclosure a necessity. As a buyer or seller, you want to protect children against the possible accidental ingestion of lead based paint!
Even more information than we’ve listed above is included in the sellers disclosure form. It may sound complicated, but it usually takes a seller only a few minutes to accurately complete the form. Handy checklists and “yes” or “no” answer questions greatly simplify the process.
The Sellers Disclosure Statement is a Win Win document for buyers and sellers.