In this podcast, real estate attorney Lee Harris from Limestone Title shares her extensive knowledge of real estate contract disclosures – why they’re necessary and how they’ve evolved over the years.
“People use to say about real estate, location, location, location,” says Harris, “But I think the phrase now is disclosure, disclosure, disclosure.” She explains that many disclosures are required by the state – such as the “Seller Disclosure of Property Condition” where a buyer acknowledges all known issues and repairs.
This mandate has been in place since 1993. Prior to that, there was a lot of disagreements between buyers and sellers when something went wrong shortly after the sale. Now as buyers look at the disclosure, they may decide they want to deal with the issue in their offer – either through a reduction in price or by a conditional sale based upon repairs made by the seller prior to closing.
Or you can think of the Seller Disclosure in another way. “I like to think of it as a chance to brag about what a good homeowner you are,” says Lenihan’s Sotheby International Realtor Greg Fleischaker. “Everyone expects a home to have problems now and then, and so this is your chance to say ‘Look how quickly I cleaned it up and what a wonderful job I did.’ You get to sell your homeownership and your upgrades.”
Another type of disclosure is required by the Federal Environmental Protection Agency for any house built before 1978. The “Lead Based Paint Disclosure” lets prospective buyers know if there is any lead-based paint in the home. “If the lead chips off and children eat it, which a lot of times, for some reason, children do — they can get lead poisoning and that can be very dangerous,” Harris explains.
A third disclosure is the “Agency Disclosure.” Harris explains, “Once you have an agency relationship with someone, you have what are called fiduciary duties to that person.” When buyers and sellers get started working with a professional, they need to know what that person is willing to do for them and how their private information will be handled.
No matter what type of disclosure you’re talking about, these contracts are ultimately put in place to protect individuals in a rather costly transaction. Harris says she likes the idea of disclosures because it’s easier to settle issues when everything is documented. Yet, it can be a delicate balance because the more disclosures you have, the less likely people are to read them. Over the years, the seller disclosure form has evolved to include topics like radon, mold, fungus, and pets. So, Harris says, we are likely to see the seller disclosure form add new items in the years to come.