Real Estate Disclosures
It is the duty of the seller’s agent or the seller to keep the principal (buyer) fully informed at all times of all the facts and information that might affect the transaction or value of the property. This is also referred to as a Real Estate Disclosure. An agent is obligated to disclose facts regarding the property’s true worth.
The same applies to the seller if they have no brokerage relationships and list their property under the title "for sale by owner". Sellers and agents may be held responsible for material facts they should have known and communicated to their principle but did not. Principals (buyer or seller) are the party employing the services of the real estate broker.
Broker agents must also inform their seller principles for example, of the buyer’s financial condition, status of earnest money deposits, or if a personal relationship exists between the agent and the buyer. All material facts must be revealed to the principal even if the disclosure of such facts might cause the transaction to fail.
Fair, efficient and prompt disclosures also include notifying the principle if the broker is personally interested in buying the listed property. In some ways, proper compliance with all applicable disclosure laws is even more important to sellers.
Regardless of whether or not they are using an agent, a disclosure form is often the only evidence protecting a seller from charges that he lied to the buyer.
Some states require external disclosures that affect the property such as earthquakes, natural hazards, and noise pollution. It is upon the seller and buyer themselves to research their states specific disclosure laws and act accordingly. Generally speaking unless you violate a state law by disclosing a defect or material fact, then discloses it.
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. Follow the Golden Rule. If you would like to know, the buyer probably does as well. Typically buyers aren't upset upon receipt of negative information. They get upset and usually take legal action when they feel they have been deceived.
It is quite obvious that insufficient and inadequate disclosures are considered unlawful actions in the real estate business. Remember and practice the Golden Rule and you should have no complications when presenting your disclosures to the buyer and his agents.