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What Do I Need To Disclose When I Sell My
Property? How Important Is Disclosure?
By Shayne Bowen
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I have heard about recent
examples of sellers having to pay judgments of $30,000 to over $500,000 for failure
to disclose! That should get anyone’s attention! This is serious business!
Thank goodness that neither my clients nor
we have
ever been involved in something like this – but there is a reason!
We are
semi-fanatical about stressing to our clients the huge importance of full, very detailed,
high-quality disclosure to the buyer!!!!! We are known in the industry as people who
are
highly meticulous about advising our clients to be really, really aware of the huge
importance of full disclosure.
Full disclosure greatly minimizes the
chance of a lawsuit and a money judgment (believe me, sellers almost always lose this
type of lawsuit!). Failure to disclose, or sloppy disclosure virtually guarantees
that the seller will face a lawsuit, and a significant dollar judgment!
Disclose fully and meticulously, sleep well, and never think
again about the sale of your home. Disclose partially, or sloppily, keep a watch on your
mailbox for the court subpoena announcing that you need to retain an attorney because
you’ve been sued! It’s so easy to avoid all problems in this area, but in order
to avoid large or even catastrophic losses, you must avoid the
following
serious mistakes. 
Shayne's MUST-DO Disclosure Guidelines
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Important: Do not limit yourself to the space included in the disclosure forms!
Write, or even better, type as many additional disclosure comments as necessary. Do
not skimp – more disclosure is better than less! Example:
Click
here for an example of a seller typewritten disclosure.
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The format for the disclosures that you type up
on a separate sheet of paper should be 1)
disclose the faulty item; 2)
whether the item was or was not repaired, and by whom; 3) whether
the problem has reoccurred again; 4) whether you obtained a permit.
5) If buyer is concerned, they are advised to check with an
appropriate expert. Example:
Click
here for an example of a seller typewritten disclosure.
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Even if an item
has already been repaired, you still need to disclose that it was faulty in the past, and then repaired!
Example: "My roof leaked last
year. A roofer repaired it. It has not leaked since, to our knowledge. We
did not obtain a permit for this repair, and we do not know if one
is required. If the buyer is concerned, they are advised to check
with an appropriate expert."
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Use the phrase "to our knowledge" often in your
disclosures.
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If in doubt, DON’T leave
the item out. No matter how minor the flaw, include
it in your disclosure!!!
If you are not certain of an answer, write in "Unknown" on
the form, even if the form doesn't give you that option. Many of the questions on the forms are highly technical,
including questions on building code and many other technical
matters! Example 1: One of the questions asks if your home is
in one of several special studies zones. Most sellers have no idea
what the correct answer is. Do NOT GUESS! Answer "Unknown"
unless you for sure know the correct answer. Example 2:
Several questions ask about whether the property is close to an area
formerly used for military purposes, or mining, etc. Most sellers
have no idea what the correct answer is. Do NOT GUESS. If you do not
know the correct answer, write in "Unknown." There are many similar
questions that are highly technical in nature. If you don't for sure
know the correct answer, write in "Unknown." On the other hand, even
if it's a technical question, if you DO know the answer, then by all
means, write in your answer.
Since many of the questions on the forms raise
lots of questions, many of our clients
write in a question mark
in pencil on each item that they don't understand,
and then contact us to help them understand the question. Of course,
when the forms are completed, the pencil marks need to be erased.
Remember the key phrase "material fact." The law states that
all "material facts" must be disclosed. What is a
"material fact?" A "material fact" is ANYTHING that could affect the value of
desirability of the property in the buyer's eyes,
whether or not there is a
specific question on the disclosure forms regarding this item.
Note: Things that "could affect "the value of desirability of the property in
the buyer's eyes" is a very broad category. If a flaw in any way affects "the
value of desirability of the property in the buyer's eyes," you must disclose
it. Do
not skimp – more disclosure is better than less, even tiny flaws!!
If you have to ask yourself whether you should disclose
something, you've just answered your own question: "YES, disclose it!!"
If you forgot to include something in your initial disclosure papers,
do not think that that it’s too late. If you think of something later that you unintentionally omitted,
disclose the new item in writing, prior to the close of escrow, no matter how minor this item is.
Avoid these mistakes and you will have greatly minimized the
potential of problems in this area! Don’t make mistakes in this area!!
A little conscientious homework now will
save you tons of potential cost and worry in the future!
IMPORTANT: We are not attorneys, and we are not qualified or licensed
to give you legal advice. If you have any questions on the legal aspects
of disclosures (or anything else pertaining to our transaction), please
contact a real estate attorney (not a general attorney). If you
need a referral to a real estate attorney, please let us know. We will
be happy to send you the names of several local real estate attorneys.
Actions:
Let us know if
you have any questions in regard to the disclosure papers.
Secondly, please fill them out in accordance
with the principles mentioned above: highly thoroughly, completely,
meticulously. And remember to write or type additional disclosures as
needed. Click
here for an example.
Over-disclose rather than under-disclose!
Doing so will save you all manner of problems
in the future!
Warm Regards,
Shayne Bowen & Staff |
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