Complete Disclosures
TLDR: Disclosure forms are the government's way of ensuring sellers are informing buyers of conditions that may adversely affect the buyer’s safety or the property value.
Disclosure forms are legally required documents that must be provided to the buyer by the seller to inform the buyer about certain aspects of the property. Requirements vary significantly from state to state, but common disclosures tell buyers about the presence of lead paint, asbestos, radon, environmental hazards, major structural or mechanical issues, natural hazards, and boundary line disputes. In other words, anything that could affect the buyer's health or safety. We know it's not ideal to have to inform buyers that a Breaking Bad scene occurred in your property, but hey, you'll be informed when you buy a house as well. Think we're kidding? Nope! In some states, sellers have to tell buyers if meth was manufactured in the property, or if the property has been considered "haunted" or stigmatized in some way.
Major issues that any seller would prefer to sweep under the rug? You may be legally required to disclose it. Having knowledge of a major defect but not telling the buyer could land you in some hot water after the sale if your state or municipality requires disclosure.
Disclosures are like Taxes: Unavoidable and present at all levels of government
Disclosure requirements vary drastically from state to state and the quantity of disclosures required tend to align with typical state norms. For example, California requires an extensive list of disclosures be provided to the buyer, while Texas’ motto is essentially Caveat Emptor, which literally translates to “Buyer Beware.” Similar to tax law, disclosure requirements exist at all levels of government and change from year to year, so we’ll update the mandatory disclosures when you list your property.
Fun Fact
The only federally required disclosure pertains to the possible existence of lead paint. If a house was built before 1978, the buyer must acknowledge receipt of the lead-based paint disclosure.
What information must I disclose in Virginia?
In Virginia, required disclosures are outlined in the Residential Property Disclosure Act, which describe circumstances that do and do not require disclosures. These are the circumstances that require the seller to inform the buyer:
The property is located in a Homeowners’ Association (HOA).
The property is located in a Condominium (Condo) Association.
This is the first sale of the dwelling.
The seller has indicated that they have knowledge of previous mining operations and/or abandoned mines, shafts, or pits wholly or partially on the property.
The property is situated in a locality in which there is a military air installation.
There are pending building code or zoning ordinance violations.
The property has previously been used to manufacture methamphetamine.
The property has a privately owned stormwater management facility.
Since 1978, two or more claims of more than $1,000 have been paid by the National Flood Insurance Program for the structure within any rolling 10-year period.
The property requires septic system operating permits.
Fun Fact
HOA and Condo Association disclosures operate similarly to contingencies in that they permit buyers to terminate the contract within three days of receipt of the HOA Disclosure Packet or Condo Association Resale Certificate.
Do I have to complete these forms?
Yes, if your state requires them, you must complete them, and you must be honest when filling them out. Most forms have to do with the integrity of the property or health hazards that may exist. Omitting information may bring trouble in the form of future lawsuits, even after you've sold the house. Depending on the state you live in, you may have the option to sign a disclaimer form instead of a disclosure form, which allows you as the seller to avoid accepting responsibility for the condition of the property. While this is legally an acceptable route, buyers may be suspicious of why you're filling out the disclaimer instead of disclosing any known defects of the property.