Seller’s Disclosure: What buyers and sellers need to know

A Seller’s Disclosure is a legal document in which the seller reveals known issues and defects with a property. Most states require it as part of the home sale process, and it's one of the most important documents you'll review as a buyer.

This is important because a home listing and a walkthrough can only tell you so much. They won't reveal roof problems, plumbing failures, pest infestations, structural defects, environmental hazards, or neighborhood issues. The Seller’s Disclosure does. By carefully reviewing this document, you'll uncover problems that could affect your decision to buy—and potentially save you from costly surprises after closing.

Key takeaways:

• A Seller’s Disclosure is a document where the sellers of a home disclose information that is relevant to the usefulness and value of the home, such as HOA rules and fees, recent repairs done to the property, nearby nuisances, and more.
• These documents can offer transparency for buyers and protect sellers from future lawsuits by proving you shared pertinent information about the property.
• Always review a Seller’s Disclosure with an expert, and if you’re hoping to buy a home, consider getting a professional home inspection.

What is a Seller’s Disclosure?

A Seller’s Disclosure is one of the many legal documents involved in a home sale and clearly states any known issues about a home and its property before a sale. Sometimes referred to as a “property disclosure,” the document requires sellers to list the negative aspects of a home so that buyers know more about what they are getting into if they choose to purchase the home.

A Seller’s Disclosure is designed so that there are no surprises near the end or after a home sale that would cause a massive delay in the purchase or cause legal action after the fact. In that sense, a Seller’s Disclosure is good for both the seller and the buyer. A seller can’t be sued by a buyer for an issue with the home if it was clearly stated in the Seller’s Disclosure. By signing the document, the buyer is legally stating that they agree to purchase the home with the previously known conditions about the home.

Are Seller’s Disclosures required?

Whether a Seller’s Disclosure is required will depend on where the property being sold is located. In most states, a disclosure is required, though precisely what information needs to be disclosed will vary. A few states follow the caveat emptor rule, meaning disclosures are not required and the buyer is responsible for doing due diligence.

Regardless of where the property is located, federal law requires certain disclosures, such as disclosure of whether the property has lead paint or not.

What does caveat emptor mean?

While a Seller’s Disclosure puts the responsibility on a seller to list things that could be negative about a home, some states instead use the caveat emptor rule, putting the responsibility on the buyer. In these states, it becomes the responsibility of the buyer to investigate any potential issues with the home that may impact their decision.

Some buyers choose to purchase a home “as is,” which can be risky for a lot of reasons. Regardless, it’s a good idea for a buyer to get a home inspection and look into home warranties in case there is an issue that they might not be able to figure out themselves.

When disclosure rules may not apply

In some scenarios, disclosure rules may vary or might not apply at all. For example, it may not apply to the sale of certain commercial properties or in the case where the home is sold by a fiduciary or estate rather than the actual owner.

Check with a real estate lawyer who is knowledgeable of laws in your area to confirm whether disclosure rules apply to a specific property.

What should a Seller’s Disclosure include?

The information included in a Seller’s Disclosure usually relates to things that could negatively affect a home’s usefulness or value. Any defects, as well as information on past repairs, as well as any additional items such as appliances that will stay with the home after sale, are also included.

Material defects

Material defects are serious problems with a property that could impact its value or usefulness. For example, if a home has a failing foundation that will be very costly to repair and could render it unsafe to live in, that would be a material defect requiring disclosure.

Seller knowledge and unknown issues

Sellers should also disclose any knowledge they have about the home and its history as it pertains to the home’s state of repair or usefulness. For example, a Seller’s Disclosure can include information such as when the roof was last replaced, who installed and maintains a solar energy system, or other information like that.

Keep in mind that the information included in the disclosure comes from the seller’s knowledge. It may not include issues that are not known to the seller and does not come from an independent inspection, which is one reason why ordering a home inspection is still important before buying property.

Common items disclosed on a Seller’s Disclosure

So, what kind of information needs to be included in a Seller’s Disclosure? Here are some of the most common issues that sellers must inform prospective buyers about when selling their property.

Property repair history

Major repairs made to a home or the property it lies on are common  Seller’s Disclosures. If there has been an issue that required a major repair, buyers have the right to know what the issue was, if/how it was repaired, and if the issue could come back. If the repairs must be done regularly, this could be a negative to buyers, whereas if a good repair was done and properly documented by a reputable contractor, this could be seen as a plus by a buyer.

Structural and system issues

Previous major damage to the home’s foundation, or current existing damage that hasn’t been fixed, can be a major red flag to prospective buyers. Disclosing that a home has these types of issues is likely to turn off buyers, so if the issue is known to the seller, they might be better off fixing it before listing the home and disclosing that the repair was done.

Some of these major issues include:

• Water damage
• Cracks in the foundation
• Termites/termite damage
• Infestations
• Asbestos
• Radon
• Lead paint
• Damaged or malfunctioning systems, including plumbing and electrical

Environmental hazards

Some environmental hazards also must be disclosed when selling a home. For example, if the owner is aware of lead-based paint, radon, or asbestos in the home, they must disclose it. Previous events, such as flooding, that could cause long-term environmental problems, such as mold, are also worthy of disclosure.

Pests and damage

Pests such as termites or rodents can cause serious damage to a property while being difficult for buyers to identify before purchasing a home. Sellers need to disclose any pests or pest damage they’ve dealt with, as well as measures used to deal with those pests.

Death, crimes, or other property history

While it may seem inconsequential to some people, some states require sellers to disclose if there has ever been a death in the home. While some states, like California, require any deaths within the last 3 years to be disclosed, some states have shorter time frames or don’t require it at all. Some states require the disclosure of a murder or suicide in the home but don’t require you to disclose if a person died of natural causes.

Similarly, if a property has been the victim of vandalism or theft, state law may require that to be disclosed.

HOA rules and fees

A Seller’s Disclosure usually includes mentioning whether the home is under a neighborhood homeowner’s association. HOAs typically involve a lot of rules and regulations that some people might not want to get involved in, not to mention the annual fees. While some homes are clearly within an HOA neighborhood, others might not be, so you don’t want them to find this out at the end of the process and it be a dealbreaker.

Liens and encumbrances

If a seller has a lien on their property, they are forced to pay back that lien or give up the property to the lien holder. If there is an existing lien on a property you’re looking at, you’d be trusting that the seller is going to pay the lien with the sale of the home. However, if they don’t, the lien holder can come after your property, which is a major detractor from closing deals on a home.

Items included or excluded from the sale

While a Seller’s Disclosure documents the condition and functionality of existing systems, what stays or goes with the home is legally determined by the purchase and sale agreement. Free-standing appliances like refrigerators, washers, and dryers are technically considered personal property rather than permanent fixtures, meaning they do not automatically convey with the house. However, buyers frequently request them in their offers. If a seller wishes to keep a high-end or sentimental appliance, they must explicitly list it as an exclusion in the purchase contract to avoid legal disputes at closing.

Property line disputes

Another common line item in a Seller’s Disclosure is about property line issues with neighbors, the city, or the HOA. This can be an ongoing battle between the owner and their neighbor about where a property line is exactly. If there is a claim out by another party against the seller for a property line dispute, this is something that would carry over to the buyer, so it needs to be included.

Nearby nuisances

Occasionally, states require nearby nuisances to be disclosed. Such things as railroad tracks, schools, airports, or landfills could all be included on that list. Any nearby facility that is going to potentially cause a noise or smell issue with the house should be disclosed to a buyer in case it negatively impacts their decision.

Historic districts

If a home is located within a historic district, the seller should reveal that in the Seller’s Disclosure. Depending on local laws, homes in historic districts may have restrictions on how they can be changed or upgraded.

For example, when you apply for a permit to make changes to your home, it may require additional review to ensure the changes won’t impact the historical integrity of your property.

When do sellers provide a Seller’s Disclosure?

Seller’s Disclosures offer a lot of information that can be very relevant to a buyer’s decision to purchase a property. You may receive a disclosure before you make an offer to buy a home, after you submit your offer, or just before closing. The precise timing may depend on local laws and the seller’s preferences.

Before an offer

Some sellers opt to provide a disclosure to anyone interested in purchasing their home before they even submit an offer. Upfront disclosure can be appealing to buyers, as it provides them with sufficient information to make sure that the property is a good fit and lets them tailor their offers to account for necessary repairs.

After an offer is accepted

In most states, Seller’s Disclosures are provided after the buyer makes an offer and the seller accepts it. At this point, the buyer can review the disclosure for any major red flags and potentially contact the seller for additional negotiation.

Before closing

In some cases, you may not receive a disclosure until shortly before closing, or you may get an additional disclosure before it’s time to close on the home. For example, if your home inspection identified issues that the seller remediated, they may give you a new disclosure describing the repairs that were done.

It’s essential to check the Seller’s Disclosures for potential issues and to address them prior to closing. Once you close on the home, you own that property and are responsible for anything the previous seller disclosed.

Seller’s Disclosure vs. home inspection

A Seller’s Disclosure includes information about the home, its repair history, and potential defects, but it only includes information that the seller of the home is aware of. A home inspection conducted by an independent expert is much more thorough and can find issues a seller may not know about, making it important to use both when buying a home.

What sellers report

In general, sellers report any information they have on a property that could impact its value, as well as provide a history of repairs and maintenance performed. However, sellers can only report on the things that they know, so the information in a Seller’s Disclosure may not be complete.

What inspectors look for

Home inspectors won’t be aware of a home’s repair history, such as when a fence was erected or when the roof was last replaced. Instead, inspectors focus on carefully examining the entirety of a property to find any issues or defects that could impact its value or usefulness.

That can include everything from hidden pest damage, the foundation, structural damage, home systems such as electrical or plumbing systems, the windows and doors, and more. If something isn’t in perfect condition or needs repair, an inspector’s job is to identify that and to note it in their report.

Why buyers should use both

Buyers should always use both the Seller’s Disclosure and a home inspection when deciding whether to buy a property. While they may contain overlapping information, they come from very different sources.

A Seller’s Disclosure is valuable for the information it provides that only the home’s owner would know, such as a home’s repair and maintenance history. The home inspection is valuable because it represents an unbiased third party’s assessment of the home’s condition and recommendations for necessary repairs.

What happens if a seller fails to disclose a problem?

If a seller fails to mention a major item on a Seller’s Disclosure, it can result in different issues. If the sale has not yet gone through and a prospective buyer learns about an issue, they can easily back out of a sale, and you could be on the hook for money already invested into the sale. If a sale goes through and the buyer finds an issue and believes you knew about it and didn’t disclose it, they can take legal action on you after the fact.

Tips for buyers when reviewing a Seller’s Disclosure

As a buyer, when you’re looking at a home, it’s a good practice to carefully review the Seller’s Disclosure to help you determine if this house is right for you. Here are a few of the things you should do when you get a Seller’s Disclosure.

Review the document with a professional

Your real estate agent is likely to be the first person to receive the Seller’s Disclosure and will give you a summary before you even see it. But read through the entire document with them and ask them to explain anything you don’t understand. It may even be a good idea to consult with a real estate attorney in case there are some special conditions, such as a pending property line dispute or lien on the home.

Cross-check disclosures against reports and documents

While a seller may be required to complete and submit a Seller’s Disclosure, that doesn’t necessarily mean they are going to give you all the information they are supposed to, or that it will all be entirely correct. If there is a major item listed on a Seller’s Disclosure, as the buyer, it’s your job to do research on it or ask your agent if they can help.

Some things to look into are any official documentation about liens or disputes that are mentioned. The seller could be downplaying the extent of the situation. You also might want to verify distances to some of the nearby nuisances or ask for receipts and statements of work on any of the major repairs that were claimed to be made.

Weigh the risks carefully

When looking over the items listed in a Seller’s Disclosure, you might determine that you’re alright with living with some of these. Some may be less costly or bothersome than others. However, be very careful taking on a property that has major damage repairs, liens, or disputes, as they can come up much later after your purchase and outside of the time frame when you can take any action against the seller.

Hire professionals to conduct inspections

Finally, it’s always a good idea to have a home inspection done on any home you’re considering purchasing. You should have a home inspector look for issues that they normally would that might legitimately not be known by the seller. You should also ask the home inspector to look carefully at any physical issues mentioned in the Seller’s Disclosure. Have them assess how well repairs were done or if there will be recurring issues.

FAQ

These are some of the most frequently asked questions about Seller’s Disclosures that you might still have.

What is in a Seller’s Disclosure?

A Seller’s Disclosure contains any information the seller is aware of that could constitute a material defect of the property, as well as information about previous repairs.

Is seller disclosure mandatory in PA?

Yes, a Seller’s Disclosure is mandatory in Pennsylvania and most other states. Check with a real estate professional to confirm what is required where you live.

When do material defects need to be disclosed?

Sellers must disclose material defects that could impact the value of a home or its usefulness that are required to be disclosed by local or state law. Each state has different requirements, so check with a local real estate lawyer.

What if there are no defects that need to be disclosed?

If there are no known defects to disclose, a seller can provide a disclosure to that effect. However, in practice a seller will often overdisclose rather than avoid disclosing if they are unsure of existing defects to avoid future liability.

What happens when someone lies on a Seller’s Disclosure?

If a seller lies on a Seller’s Disclosure, the consequences can drag on past the sale of the home. Just because you bought the home doesn’t mean they’re off the hook if they intentionally lied about an item that should have been on the document or if something was misconstrued. However, it will likely be up to you as the buyer to bring about a lawsuit to hold them liable for the repairs after the sale closes.

What does it mean if there is no seller disclosure?

A Seller’s Disclosure is not required in all states, so if there is no disclosure, the transaction may be occurring in one of those states. If there is no disclosure and you are in a state where disclosures are mandatory, it may indicate that the seller has no knowledge of material defects. It is in your best interest to contact the seller to request a disclosure or explanation for lack of disclosure before moving forward. A missing disclosure may be a red flag and makes it doubly important to conduct due diligence.

How can I write a good disclosure statement?

As a seller, it’s important to be completely honest in your Seller’s Disclosure so that you can be upfront with potential buyers and avoid wasting everyone’s time. Stick to what you know about your home without having to have it inspected. Fill out the appropriate form for your state and make sure you disclose any past issues and repairs or reconciliations without guessing.

Where can I find a Seller’s Disclosure form or example?

The form a Seller’s Disclosure takes will depend on the information it contains and the requirements of the state you’re located in. You can consult your local real estate professional or a real estate attorney to obtain an example of a Seller’s Disclosure that reflects the law in your area.

The bottom line: Seller’s Disclosures help buyers and sellers avoid surprises

A Seller’s Disclosure document helps protect both the seller and the buyer in a home purchase transaction. Designed to clearly state the history of issues with the home, this avoids costly issues and time spent on a closing process that can break down at the end.

If you’re looking to purchase a home, learn more about the home buying process and get started with an online application with Rocket Mortgage to help speed along your process of buying a home.