Facts About Property Disclosure
Home Disclosures and Material Facts
By law, real estate agents cannot fill out any sellers’ home disclosures unless the agent is the seller or a party to the transaction. However, that doesn’t stop some naive agents from completing disclosures on behalf of their clients and opening themselves up for potential lawsuits. After all, it’s mostly lawsuits that have prompted the creation of many of the disclosure forms agents ask sellers to complete. If your agent can’t tell you, ask a lawyer if you need to sign every disclosure handed you.
Lead Based Paint
A federal disclosure such as Lead-Based Paint is required for all transactions if the home was built before 1978. The disclosure also gives the buyer 10-days to conduct inspections for lead-based paint, unless that time period contingency is waived in writing. It’s considered good practice, however, to give every buyer, regardless of where she lives and regardless of the type of property she is under contract to purchase, the disclosure regarding lead-based paint. The potential for a lawsuit is too great to do otherwise. Besides, even though it’s prohibited, there are still places where lead paint is sold.
Residential Disclosure Regarding Material Facts
Material Facts are commonly referred to as anything that would affect the buyer’s decision to purchase or the price and terms the buyer offers. In other words, if you have knowledge about a defect, it should be disclosed. In Illinois, sellers are to notify buyers if a death has occurred on the property in the last three years. Some buyers are creeped out by knowledge that a seller died in the house.
Causes of Death
Many home buyers are fine with news of a death occurring in the house as long as it wasn’t violent or gruesome. There are also buyers who believe homes are haunted by former occupants who died in the house. If you have specific details, you might want to consider sharing it with the buyer unless it pertains to AIDS. Check with your local laws and a real estate lawyer for advice about deaths surrounding AIDS because in some states, AIDS falls into a protected class and could be subject to discrimination claims as well. There are times you’re darned if you do and darned if you don’t.
Do You Need to Disclose Every Home Repair?
The Illinois Residential Real Property Disclosure Act (RRPDA) requires sellers to complete a disclosure report indicating whether they are aware of any “material” defects in the home or on the property. The term “material” isn’t defined by the Act, but such defects may include:
- Flooding or recurring leaks in the basement;
- property located in floodplain;
- Cracks or other defects in basement walls or foundation;
- Roof or ceiling leaks;
- Defects in plumbing, electrical, heating, ventilation, air conditioning, or sewer systems;
- Lot line or boundary disputes;<
- Presence of asbestos, lead-based paint, water contamination, high levels of radon;
- Underground storage tanks that may leak.
The sellers are not required to actively look for defects, only to state what defects they are aware of, if any. For example, they do not need to hire an engineer to assess the property’s structural integrity or review floodplain maps.
Sellers also do not have to disclose previous defects that have since been corrected. If a flood control system has been installed in the basement, for instance, the sellers would not have to disclose previous flooding problems – assuming the problems have not recurred since the system was installed.
In areas with basements, this is a huge issue, as are problems surrounding wet basements. Let’s say a seller whose newer wood floor showed discoloration in spots. Was it due to moisture? If the seller isn’t sure they can simply removed the rugs, disclosed the discoloration to the buyer and offered a $5,000 credit for new floors, which most buyers would accept without further discussion or fuss.
What About Rumors?
Generally speaking, unless you will violate a state or local law by disclosing, if you have knowledge of a defect or material fact, then disclose it. If a neighbor repeated a rumor, and you have not verified nor disproved the rumor, you might want to consider telling the buyer about the rumor.
Follow the Golden Rule. If you would like to know, your buyer probably does as well. Typically, buyers aren’t upset by receipt of negative information. They get upset and call a lawyer when they feel they have been duped, deceived or lied to.
In Illinois and the Chicagoland area the most common types of disclosures the seller will be asked to sign are:
- Radon Dislcosure
- Mold Disclosure
- Lead Based Paint Disclosure
- Residential Disclosure
Beaulieu Real Estate Agents are educated and experienced in the disclosure process, and will be able any questions or concerns you may have regarding property disclosure.
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