What Homeowners Have to Disclose to Buyers

When it comes to certain issues or events in a home, not everything can be swept under the rug.

Just like there are lemon laws regulating the used car market, homeowners are obligated to disclose certain things about their home to prospective buyers. Failing to identify certain problems like a leaky roof, or events like a murder in the home, could result in a lawsuit.

“When selling a house there are disclosures in almost every state,” says Les Kramsky, a real estate attorney in Marlboro, N.J. “If you know about any roof or basement leaks, you’re obligated to disclose them.”

Most states require issues with any major systems with heating or air conditioning units or even appliances that aren’t working to be revealed. According to real estate experts, typically the seller’s realtor will provide a disclosure statement to the buyer that lists any pertinent information.

While most states require more structural problems like leaky roofs or non-working HVAC systems to be divulged, some even go as far to identify things like a haunted house or if a murder occurred on the property.

“Disclosure laws vary by state, so there’s not a one-size-fits all approach,” says Stephanie Singer, a spokeswoman for the National Association of Realtors. “The law in most states requires sellers to notify buyers about known material defects in the property in question. Typically, the duty to disclose known defects also extends to the real estate professionals involved in the transaction.”

According to Singer, 47 states require mandatory seller property condition disclosures. Alabama, West Virginia and Wyoming don’t require any disclosures at all. Alaska and South Dakota require disclosures of a murder or suicide on the property in the past 12 months.

Singer says that a number of states do not require the disclosure of a murder, suicide, felony or other crimes that happened on a property.   In Connecticut, Delaware, New Hampshire, North Dakota and Oklahoma, sellers don’t have to disclose criminal activity unless the buyer asks directly. California and Oregon are the only two states that require specific disclosures of earthquake zones while other states require disclosure of soil slippage, upheaval or settling, she adds.

The past presence of a meth lab has to be disclosed in some states, including in Illinois, says Jenna Smith, listing specialist for Redfin Chicago. The reasoning behind the disclosure is because there can be a lot of chemical residue that could make people sick.

As for a haunted house, since it’s subjective, Smith says most states don’t require sellers to share this information. “A haunted house is not a material fact because I can say it’s haunted and someone else would think I’m crazy,” she says.

If homeowners knowingly withhold material information to a buyer, the seller could face a lawsuit. Winning a lawsuit of that nature may not be that easy, however. According to Kramsky, not only can it be expensive to sue the seller, but the buyer will have to have a really strong case to win.

“If you don’t disclose it nothing will happen unless after the buyer purchases the home something happens, then they have right to sue the seller,” says Kramsky. “It’s kind of like lemon laws, you can sue for any type of misrepresentation.”