Selling your home comes with responsibilities, including the requirement to candidly communicate all known issues with your property. The seller’s disclosure ensures buyers are aware of anything that could negatively affect the home or its occupants.
Like many other aspects of selling a property, seller disclosure requirements vary from state to state. There are also federal requirements and even some local laws.
Working with a top-quality local real estate agent can help you understand the requirements in your area and navigate other issues. Don’t have an agent yet? Clever can help you find one; simply answer a few questions about your property and your goals, then get matched with top local agents for half of the standard listing fee — 1.5%.
1. What is a seller disclosure — and why does it matter?
A seller disclosure is a printed or written statement a seller provides to buyers reporting known property issues that may affect the livability, appeal, safety, or value. These issues can include anything from mold problems and water damage to foundational cracks and even noisy neighbors.
Many states provide a templated checklist or form for disclosing issues, and your realtor can help you determine the best way to fulfill this requirement.
Seller disclosures are important because they were created to protect both parties. For buyers, it allows them to make an informed decision on what could be their largest-ever purchase in life. For sellers, honest disclosure can save them from potential legal liability down the road. To be safe, if you’re uncertain whether you should disclose something or not, it’s best to do so.
2. Who sets disclosure requirements?
Seller disclosure laws exist at multiple levels in the United States. Federal law is limited in scope and mostly relates to the disclosure of lead-based paint. Regulations regarding what sellers need to disclose are left mostly to state laws.
Almost every state has its own requirements regarding seller disclosures. Also, these requirements can be known by different names, depending on the location. For instance, seller disclosures are known as the Transfer Disclosure Statement (TDS) in California and the Real Estate Condition Report in Wisconsin.
A few states follow the caveat emptor (Latin for “let the buyer beware”) doctrine and may not have formal disclosure requirements. However, even in these states, known defects must still be disclosed.
In certain cases, municipalities may have seller disclosure obligations in addition to federal laws and state laws governing the city's location.
For example, in New York City, where co-ops and condos are common, there may be additional considerations for sellers, such as disclosing known issues in the building as a whole even if you’re selling a single unit.
3. What are sellers typically required to disclose?
Common disclosures checklist
| Property condition and structural issues |
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| Environmental hazards |
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| Legal and regulatory issues |
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| Other |
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Outside of federal law, homeowners have varying obligations based on their state as to what is required for them to disclose.
In general, sellers should disclose “material facts” — information important enough to affect the value of the home or the buyer’s decision to purchase.
These are some of the most common issues sellers usually have to acknowledge to buyers.
Lead-based paint (federal law)
Homeowners with properties built prior to 1978 are required to reveal to potential buyers and renters alike the existence of lead-based paint for most housing.
As a federal law, the Lead-Based Paint Disclosure Rule (Section 1018 of Title X) issued by the Environmental Protection Agency (EPA) applies nationwide.
Buyers have a 10-day inspection period to test for lead and hazards stemming from lead-based paint. Sellers with knowledge of lead-based paint used anywhere on the property must also provide a copy of the pamphlet Protect Your Family from Lead in Your Home.
Structural defects
Anything related to the structural integrity of the home must almost always be disclosed.
This includes a cracked foundation, a termite infestation, a sagging roof or ceiling, and other similar items regarding the “bones” of the house.
Not only can these affect the value of the home significantly, but they could also be dangerous to the occupants. Even if you’ve resolved past structural issues to your satisfaction, you may still need to disclose this history to the buyer.
Water damage or flooding
You should disclose any history or current instance of water damage, such as leaks, flooding, moisture-caused issues, etc.
Sellers of homes in certain areas that are prone to flooding, such as in wetlands or low-lying areas adjacent to bodies of water, should also disclose these potential hazards.
Mold or environmental hazards
Knowledge of any health and environmental problems, such as mold, toxic chemicals, asbestos, formaldehyde, and radon, needs to be relayed to buyers.
These can cause serious health problems for the buyer and other occupants, so be sure to add them to your disclosure statement.
Pest infestations
Sellers should note any past or current infestations with termites, bedbugs, rodents, and other unwanted guests. Even if it’s been a while and the problem has been eradicated, prospective homeowners want to know what they might be in store for, and there may be slight damage now that could get worse in the future if it’s not addressed.
Repairs and renovations
Many state disclosure forms ask specifically about bigger improvements, renovations, and repairs the property has undergone.
This allows the buyer to get a sense of the upkeep and assures them the house has been maintained. If any permits were required for previous work, be sure to include those in any disclosures.
Legal issues
Any legal problems or restrictions currently facing the property need to be communicated. This includes easements, boundary disputes, limitations on land use or building, liens, ongoing lawsuits related to the property, code or zoning violations, and more.
You may also be required to note any past legal encumbrances, so be sure to consult the real estate laws in your state.
Deaths, violent crimes, or paranormal activity
Certain past occurrences, such as deaths and violent crimes, may cause reputational damage or unease for the buyer. This type of real estate is known as a “stigmatized property,” and rules vary from state to state as to what needs to be disclosed and how far back the incident must have occurred.
California, for example, requires a seller to notify the buyer if a death has occurred in the home within the previous three years. In a handful of states, it’s even required for a buyer to be made aware their prospective home is reportedly haunted, such as in New York.
Other items to disclose
The above list is not exhaustive, and there are possibly other things that need to be disclosed to potential buyers.
For example, the location of underground units (e.g., septic systems, sewer lines), planned neighborhood changes (e.g., upcoming development) that may affect the property’s value or livability, and even unfriendly neighbors or noise and light pollution.
4. What should you disclose even if you’re not required to by law?
Depending on your state’s laws, you may not have to pass on certain information to prospective buyers. While some states have comprehensive documentation as to all that’s expected from the seller’s side, other states may only require disclosure of “big” items.
Many experts we talked to share the sentiment with Bruce Ailion, realtor and attorney with RE/MAX Town and Country, who noted, “My position is always, disclose, disclose, disclose.” Even if you aren’t explicitly required to disclose an issue after reading your state’s rules, it’s usually best practice to mention it anyway.
You can save yourself a lot of headaches, not to mention maintaining trust with any buyers.
“Sellers who remain transparent about minor defects, like previous pest treatments or boundary disputes, usually have smoother transactions and lesser proclivity of being part of disputes,” states Oliver Morrisey from Empower Wills & Estate Lawyers.
5. What happens if you don’t disclose something?
Failure to disclose something you knew to be an issue and concealing problems can have serious legal consequences.
While a state may not necessarily find it to be a criminal penalty, there likely can be heavy civil penalties and monetary damages owed should the buyer sue and courts rule against you.
As Oliver Morrisey shared, “One of my clients sold a property while failing to disclose a lingering drainage issue, leading to a long and costly lawsuit that basically voided any profit.”
A knowing misrepresentation on a seller’s disclosure statement will at the very least likely allow buyers to back out of the deal. In some cases, buyers could be able to cancel the contract, recoup all their expenses and deposits, and even be entitled to a monetary amount for damages.
If someone becomes sick, injured, or even dies because of your failure to disclose a known problem (think lead poisoning or electrocution), it could be grounds for criminal prosecution.
6. Final tips: When in doubt, disclose; work with an agent to get it right
The general rule is: when in doubt, disclose. Even over-disclose. You’re protected legally (and can sleep soundly) when you give prospective buyers all of the facts.
Transparency, honesty, and forthrightness are the keys to a smooth sale, buyers who trust you, and avoiding legal and financial ruin.
Work with a knowledgeable real estate agent and/or real estate attorney who can help you navigate the disclosure requirements, laws, and other aspects of selling a home in your city and state. Clever Real Estate can help match you with a top-rated agent in your area, so you can get expert support and peace of mind throughout the home-selling process.