Disclosure Requirements: What Sellers Need to Share with Buyers

A seller's disclosure is a document that lists any known problems that might lower a home’s value, such as a leaky roof, property damage, faulty plumbing, or electrical concerns.

Sellers must provide buyers with a disclosure so they are fully aware of a home’s condition before agreeing to purchase it. The purchase agreement usually outlines when the seller must provide buyers with a disclosure, but the timeline can vary. The purchase agreement also explains the buyer’s rights, the timeline for backing out of a sale, and rights regarding negotiating.

Although a seller's disclosure primarily protects buyers, the document can also protect home sellers in case a problem is found after the home sale.

Failure to provide a disclosure, or to fully disclose any known problems, can impact the home sale. When you partner with an experienced real estate agent, he or she can help you understand what needs to be disclosed to ensure you remain compliant with the law.

Federal and state rules for home disclosures

Federal guidelines dictate what sellers must disclose to buyers.

For example, if a home was built before 1978, sellers must include a notice that the house could contain lead paint. They must also provide the buyer with an Environmental Protection Agency pamphlet and a timeframe to conduct lead testing, according to federal law.

States also have their own rules when it comes to what sellers must disclose.

In California, buyers must complete the Real Estate Transfer Disclosure Statement and Natural Hazards Disclosure, which informs buyers if the home is located in an area that is prone to natural disasters, such as earthquakes or fires.

Other states have more leeway. In Alabama and West Virginia, sellers only have to abide by federal requirements, and they do not have to disclose any known problems. These are often referred to as "buyer beware" states, from the Latin term “caveat emptor.”

Requirements vary, so it’s important to check your state’s guidelines. It’s also a good idea to partner with a trustworthy real estate agent or attorney who can make sure you remain compliant when selling your home.

Common problem sellers should disclose

The seller’s disclosure only requires a seller to reveal any known problems. If the buyer chooses to have the home inspected, it’s possible the inspector will find issues the seller did not know about.

If you know your home needs extensive repairs that you can't afford, you may have better luck selling to a company that buys houses for cash than to a buyer on the open market.

1. Roof problems or leaks

If you’ve noticed any roof damage or have had trouble with leaks, it’s important to disclose this to the buyer so they can address the problem right away. A damaged roof may lead to ruined shingles, which can lead to drafts and water damage throughout the house. In the worst case scenario, the roof could cave in.

2. Foundation defects or cracks

Structural damage in the foundation should also be noted, particularly if it impacts the basement or other rooms in your home. Cracks in the foundation can impact your flooring levels, causing leaks and making it easier for pests to get in. Ask your real estate agent if you’re unsure what cracks on your property should be disclosed.

3. Plumbing or HVAC issues

If you have a sink that leaks, a water heater that only produces lukewarm water, or an air conditioner that struggles to work, you’ll want to reveal these problems in the seller’s disclosure. A leaking sink can lead to water damage or burst pipes, and you don’t want the buyer to discover a broken air conditioner in the middle of a summer heat wave.

4. Flooding damage and other leaks

Although you might be used to your basement flooding, you’ll need to share this information with the buyer in your disclosure. Any other recurring leaks should also be noted. Floods and leaks can lead to mold or mildew growth if stagnant water pools. On top of the safety issues, damaged floors are unappealing and may upset buyers who thought you were forthcoming.

5. Damage to walls, floors, windows, and doors

If there’s a hole in the wall, missing floorboards, a broken window, or a significant problem with a door, it’s better to be safe and report these blunders on your seller’s disclosure. Not being able to open a window or door could be a fire hazard, while missing floorboards could cause homeowners to trip. Holes in the walls could also expose dangerous electrical wiring or lead to pests getting into the home.

6. Pest or termite infestations

No one wants to buy a home that’s been invaded by troublesome pests. Pests can spread diseases, are a general nuisance, and may even destroy your home. Even if you think you’ve addressed the problem, it’s best to let the buyer know about any pest problems. Reporting infestations is imperative because the buyer might notice problems after moving in and suspect you of lying on your disclosure. This could lead to legal problems.

7. Lead, asbestos, or radon within the home

If your home was built before 1978, you're legally required to tell a buyer that your home could contain lead paint. If you’re aware of other areas with asbestos, radon, or other known carcinogens, it’s best to disclose them up front. These minerals and gasses have been linked to cancer and other serious diseases, and they could cause health problems to flare up for unsuspecting buyers, particularly those with vulnerable family members, young children, or pets.

8. Property boundary issues

It’s important that the home buyer knows where the property boundary begins and ends. Your daily argument with your neighbor about the property line may seem insignificant, but it could turn into a nightmare if the buyer decides to build a fence, only to find out the boundaries are debated.

9. HOA fees and rules

Buyers need to know upfront about regulations or limitations associated with the homeowners associations. Some HOAs dictate how often you must cut your grass and limit what you’re allowed to build, such as decks and sheds. Even if HOA rules seem reasonable to you, it’s important not to omit anything from the buyer.

10. Electrical problems

That rickety light might not bother you anymore, but it could be the sign of an electrical problem you’ll want to note. Failing to report electrical problems could lead to frequent outages and, in the worst case, a fire. You should also let a buyer know if certain light fixtures don’t work so they’re aware that they may need to make electrical repairs before moving in.

Talk to an agent to learn more about what to disclose

Although these are the most common problems sellers should disclose, there are many more. In some states, you might need to inform the buyer if the home was the scene of crime or any supernatural activity.

Failure to notify a buyer of a known problem could leave you open to legal action, which could cost you more in the long run than if you relayed the information upfront. If you’re not sure what to include in the seller’s disclosure, talk with your real estate agent to understand your state’s rules and your legal obligations.