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How-To Guide for Reviewing a Sellers Disclosure Form

July 26 2018
by Leisl Bailey

how to guide for reviewing sellers disclosure forms

Negotiations. Inspections. Appraisals. More negotiations. Paperwork.

Buying a home is a whirlwind and it’s easy to let a few things slide– like that pre-sale inspection you really don’t think you need. One thing you definitely should not let slide, however, is looking at the sellers disclosure form.

Sellers Disclosure

Before we launch into the items to do a double take on in your pile of papers, let’s pause to understand what sellers disclosure is. We’ll also quickly review the reasons why for sellers disclosure to help you get a better idea of why it is important.

What is disclosure?

You know those horror stories about someone who moved into the house only to find out that black mold coats the interior of the walls or a rat infestation lives in their crawlspace? If the seller knows of this or similar issues with the property, they are must put it in the disclosure document, per law.

This form is usually a checklist where the seller marks that yes, there is an issue that they know about, or no, there is not an issue that they are aware of. Depending on the rule in your state, the seller may be completely off the hook for any question they answer “no” or “I don’t know” to. But if the seller is aware of issues with the property or something in the neighborhood that could potentially cause the home value to plummet, that must be included in the disclosure form.

Reviewing a Sellers Disclosure Form

Although a seller may not include everything that is wrong with the property, going over the seller’s disclosure form is never a bad idea. Here are a few things to pay special attention to if you want to avoid any big issues.

Right To Property

Although the title company should run a search to make sure that the seller is the only one with rights to sell the title, now’s the time to double check. Make sure the seller not only owns the complete rights to the property (to their knowledge), but also discloses any issues with the rights to the property. You don’t want to happily purchase the property only to find yourself smack dab in the middle of a property line dispute. If there are issues with the property boundaries or disputes of a similar nature, it would probably be in your best interest to obtain a copy of the assessment. You can find one at your local county assessor’s office.

Clean Water Source

Although many homes in larger cities are connected to the city water, you’ll still want to make sure. You’d be surprised at how many people move into their homes in more rural areas only to find out that their well ran dry and they get to dig another. In addition to a clean and replenishable water source, you’ll want to check if there is any irrigation options or sprinkler systems on the property, and that they are well maintained. You don’t want to have a broken water line racking up a bill.

Sewer or Septic System

Nothing stinks more than issues with the sewer or septic! You’ll want to know as much as you can in this department. Pay attention to any repairs that have been made, any issues that the seller is aware of, as well as the last time service was done to the septic. If you do end up with issues from the septic or sewer system and it turns out the seller was aware of it (because it’s happened before), then know your rights! On the chance that you can make a good enough case, the seller may be the one to fix it. It is also wise as a seller to disclose everything or risk a big bill from court!

Structural

Structural covers a variety of items that you’ll want to know everything about. You’ll want to know how old the roof is and if there have been any issues with it so far. The life of your average asphalt shingle roof is 20 years. If your roof is nearing that age, know that you will have that expense in the future. If the roof has repairs, you’ll want to make sure they were made by someone who knows what they are doing and that it was done well.

Along with the roof, you’ll want to be aware of any add-ons or repairs on the house. If they didn’t take out any permits or the repairs are not up to code as far as the seller knows, it can cause major issues for you down the road. Be sure to have your inspector check out the repairs and additions to the house, just to be sure everything is good to go.

Take note of any and all pest infestations. Whether carpenter ants, termites, or rodents– you’ll want to know. Pests can cause damage to the walls, insulation, and stability of the house.

Systems

Electrical issues can range from irritating to downright dangerous. If the seller is aware of any electrical issues past or present, you’ll want to know. You’ll also want to know the age of the breakers. If the breakers are old, they could not work or catch fire.

Make sure the plumbing is up to code and in good condition as well. Out of code plumbing can make you sick, as well as lead to a mountain of issues that are expensive to fix. It’s best to check and make sure the seller has no knowledge of anything before you sign.

The Water Heater and HVAC

Water heaters are usually good until they go out or are damaged, but you’ll want to know how old they are so you can have an idea of when that will be. Tankless water heaters usually last 10-13 years, while electric and gas water heaters typically last anywhere from 8-12 years.

The Heating, Ventilation, and Air Conditioning (HVAC) systems should have had regular cleanings and maintenances to keep them purring on. A well maintained system will last anywhere from 15-20 years, but you’ll need to replace some parts along the way. It’s best to know what replacements the seller has made in the past to gauge how long your system will continue to run.

Disclosure Form vs. Inspection

Never take the seller’s disclosure as the final say in everything wrong with the property. It is a good idea to get an inspection regardless of what the disclosure document says. An inspection will often turn up issues that the seller was unaware of, giving you a chance to fix it or back out. Along with an inspection, you might want to get a comprehensive loss underwriting exchange (CLUE) from the homeowner’s insurance. This will help you get a better idea of the complete history of the house.

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