For buyers who wish to brave the unknowns of buying an existing home, home disclosures may provide some assurance that they’re getting a home that isn’t riddled with structural issues or hidden health hazards. However, there are limits on the extent to which home disclosures can protect buyers, so it’s important to understand what, exactly, home disclosures are, and what they are not.
What is a home disclosure?
Most states mandate that sellers outline known issues with the home or property they are trying to sell. Sellers are generally required to be upfront about any major issues the home may have (faulty foundation, prone to flooding) or to which the home may be exposed (fires, earthquakes, hurricanes). Failure to disclose known issues can make the seller liable for associated repairs or renovations down the road, so it’s generally in the seller’s best interest to disclose all known issues.
Why wouldn’t a seller disclose?
The key to understanding disclosures is that sellers are required to disclose problems of which they are aware. In most states, this means that a seller isn’t liable for problems that they were unlikely to be aware existed (mold inside of the walls, for instance). Most sellers don’t blatantly cover-up issues with a home; rather, most (particularly in homes where upkeep has lagged) are simply unaware of bigger problems that may be lurking inside the walls, in the attic, or in the basement.
Are disclosure procedures the same in all states?
No. State laws regarding the liability of sellers and the types of problems that must be disclosed vary widely. For instance California, which has one of the toughest disclosure laws, requires sellers to complete something called a “Transfer Disclosure Statement” which itemizes issues with the home, including seasonal hazards, the presence of lead paint or asbestos, and even neighborhood noise problems. Other states mandate certain hazards that they expect sellers to be aware of whether or not problems are obvious. Both sellers and buyers should check their state laws to make sure all paperwork prepared in the course of a sale is compliant.
Do disclosures protect the buyer?
Only if after taking possession of the property they discover problems of which they feel the seller would necessarily have been aware. In these cases, buyers typically have to sue the sellers in order to force restitution of expenditures on repair or renovation. In the case of the disclosures given to the buyer, the buyers must always remember: what is outlined in disclosure paperwork is not a guarantee or warranty on the house. Disclosures are merely descriptions of the current state of the home, and don’t imply that no new problems will crop up in the future.
As you can see, while disclosures play an important part in making sure that buyers aren’t stuck with faulty or damaged homes, they are no guarantee that a home with few disclosures isn’t suffering from major hidden issues of a structural or hazardous nature. For buyers looking for more assurance as to the longevity and quality of their life’s largest investment, considering a new home constructed with brand new materials and falling under an extended structural warranty—such as those from LGI Homes—may be the best course of action. After all, homeownership shouldn’t be burdened by the hassles of problems inherited from a previous owner. At LGI Homes, worry-free homeownership is our promise, and we stand behind our quality—every home, every time.