Real Estate Articles

REALTOR®: Disclosure - great for seller, buyer and real estate professional

If you are a homeowner who is considering putting your house up for sale this spring, after choosing a Realtor® and preparing your house, the next step will be wading through the all-important property disclosure statement.

More than two-thirds of all states require that home sellers present home buyers with a property disclosure form listing known problems affecting the condition of the property, physical defects and even paranormal activity relating to the property. Failure to do so could result in civil and criminal action, and in some cases, rescinding the sale.

All disclosure forms generally cover in great detail the legal, structural and environmental condition of a property prior to sale. Some states have minimal disclosure requirements. Does the roof leak? Has there been an addition, remodel or other major work, and was it completed to code? Are there structural cracks or defects? Other states have disclosure forms that are more detailed, as many as 10 pages long.

Disclosure forms may differ depending on the region. For instance, earthquake hazard disclosure is required in California; many western states require wildfire hazard disclosure; Hawaii seeks disclosure regarding erosion from mudslides or volcanic activity; home sellers in Alaska are required to reveal possible nuisances such as airplanes, trains, dogs, traffic, racetracks and neighbors; South Dakota requires sellers to disclose whether the property was ever used for the production of methamphetamine.

Other states require an insurance disclosure, where the seller has to provide a report that covers the last five years, because new homeowners are increasingly having difficulty getting insurance. Disclosure can even reach to issues like whether the house is haunted or was the scene of a murder, suicide or AIDS-related death.

At one time, most real estate agents represented the interests of home sellers exclusively and caveat emptor – “Buyer beware” was the norm. The rise of the consumer-rights movement and buyer's agents overturned this notion and both sellers and their agents were held liable for failing to disclose major known defects to a buyer.

By the late 1980s, state legislatures began to codify property disclosure as an extension of consumer-protection laws. Any home seller can be legally liable if a state's disclosure requirements aren't met.

Today, most brokers use some form of seller disclosure to protect their sellers and themselves, even in states where it isn't required by law. State Realtor organizations have developed disclosure forms and encourage their use among their members.

The highly acclaimed PRDS forms were created by Silicon Valley real estate experts for the way real estate is practiced on the Peninsula. PRDS Forms Online is available as a member benefit to all Realtor members of the Silicon Valley Association of Realtors® (SILVAR) and the San Mateo County Association of Realtors® (SAMCAR).

The National Association of Realtors® (NAR) has included disclosure in its code of ethics, regardless of state law. Realtors with SILVAR and SAMCAR adhere to this strict code of ethics. Not all real estate professionals are Realtors, however.

At least 32 states require some type of formal seller disclosure, according to NAR. They are: Alaska, Arizona, California, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Michigan, Mississippi, Nebraska, Nevada, New Hampshire, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Virginia, Washington and Wisconsin.

Disclosure benefits everyone – the seller, the buyer and the real estate agent because it eliminates confrontation and brings "peace of mind" to all parties. Buyers want to know what they're buying, and sellers want to disclose what they know about their property in order to eliminate future confrontation and lawsuits.

“Two of the most consistent lawsuits against Realtors continue to focus on disclosures and broken promises,” according to Gov Hutchinson, assistant general counsel and staff vice president of the California Association of Realtors®.

Hutchinson said C.A.R. has come out with a new form known as the Agent's Visual Inspection Disclosure. Though not required, this form gives agents an opportunity to be more specific and more room to write their disclosures. The form also includes disclaimer language which attempts to protect the real estate agent because “their (buyers) expectations versus reality causes a lot of lawsuits.” Hutchinson explained.

A Realtor is your best resource to ensure that your home is sold smoothly and within existing laws and regulations. Work with a Realtor who has the experience and resources necessary to do the job right for you. To find a Realtor in your area, check the SILVAR Web site at www.silvar.org.

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, e-mail , or phone (408) 200-0109.

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