Common Real Estate Disclosures You Must Know

Brian Chafin

By Brian Chafin

Last Updated on February, 2025

In real estate, honesty is truly the best policy. When you’re selling a home, real estate disclosures ensure that buyers aren’t left in the dark about potential issues.

It’s all about being upfront about the property’s quirks, those pesky things that might impact its value or the safety of its future residents. 

Real estate disclosures don’t just keep you on the right side of the law; they make sure everyone walks away from the deal feeling good about it.

So, if you’re getting ready to sell, here’s a breakdown of the common real estate disclosures you should know to make the process smooth and fair.

Quick Summary

  • Disclosures ensure buyers are informed about potential property issues, protecting both parties from legal complications and fostering trust and transparency during the transaction.
  • Common disclosures include natural hazard risks, market condition advisories, state or local transfer disclosures, Megan’s Law (registered sex offenders), and issues like health hazards, mechanical problems, flooding, HOA information, and neighborhood nuisances.
  • Failing to disclose can lead to legal trouble, canceled sales, and reputational damage. Sellers have ethical and legal responsibilities to be transparent about known issues, emphasizing the role of honesty in successful real estate transactions.

What is a Seller’s Disclosure?

Seller's disclosure document on a table

A seller’s disclosure form is your way of saying:

“Here’s everything you need to know about this house.” 

It’s a disclosure document that includes details on defects, hazards, or material problems with the property. This particular disclosure protects sellers from real estate litigation and helps potential buyers see the whole picture. 

Sellers disclose this information to keep everyone on the same page and avoid any liability issues down the road. After all, being upfront isn’t just a state or federal law in many places, it’s the smart thing to do.

Why are Disclosures Essential?

In any residential real estate transaction, disclosure provides buyer protection and sets the groundwork for a solid purchase contract. 

By laying it all out there, prospective buyers can better evaluate the purchase price with a full understanding of any disclosed issues and potential property improvements. This is a big deal for buyers and helps home buyers avoid unexpected surprises after closing the deal.

Useful guides:

Key Disclosures Every Buyer and Seller Should Know

Seller disclosure statement and a home key on a table

There are some common disclosures that pop up frequently in real estate, and these are the ones you’ll want to pay close attention to.

  1. Natural Hazards Disclosure

Natural Hazards Disclosures are a heads-up to potential buyers about any environmental risks nearby, like earthquakes, floods, or wildfire zones.

For instance, in California, state law requires sellers to disclose if a property is at risk for any natural hazards that could impact the home or its value.

It’s about making sure everyone is aware of the environment they’re buying into, preventing any future health problems or environmental hazards.

  1. Market Conditions Advisory (MCA)

The Market Conditions Advisory (MCA) may not be legally required everywhere, but it’s helpful. It lets buyers know that market conditions can affect a home’s value and that prices may fluctuate.

Since disclosure laws vary by state, some places ask sellers to give buyers this heads-up, especially in a hot market. Buyers appreciate this transparency, which also acts as a buyer beware signal for those jumping into a fast-changing market.

  1. State Transfer Disclosure Statements

The Transfer Disclosure Statement (TDS) is required by state law in certain places, like California, and gives a full rundown on real estate issues, including boundary line dispute, electrical systems, and air con conditions.

This document isn’t just a formality, it provides buyers with crucial information on any material defects or other disclosed issues that could impact their purchase agreement.

  1. Local Transfer Disclosure

The Local Transfer Disclosure brings up neighborhood-specific details, such as nearby construction plans or zoning rules, and might include late night parties, nearby construction noise, or the presence of registered sex offenders.

It’s good to know what’s going on outside the house, too, because no one wants to be caught off guard by the neighbors after moving in.

  1. Megan’s Law Disclosure

Megan’s Law requires federal laws disclosure regarding registered sex offenders in the area. Depending on your own state’s rules, sellers may need to point buyers to resources where they can look up this information.

This “buyer beware” notice keeps both sides in the loop and maintains transparency about the neighborhood.

Additional Common Real Estate Disclosures

An empty seller's disclosure statement clipped on a file

Apart from the basics, here are some other required disclosures that you may encounter:

  • Death in the Home: Some states require sellers to disclose if a death occurred on the property, particularly if it was a violent crime or the property has a certain stigma attached.
  • Neighborhood Nuisances: In states like North Carolina, real estate laws require sellers to report nuisances, whether that’s the smell from a nearby factory or a neighbor’s loud music. It’s all part of thorough estate disclosures.
  • Health and Safety Hazards: Health risks, such as mold, radon, or foundation issues, are often required disclosures. These environmental hazards can affect the home’s value and the buyer’s health.
  • Mechanical Issues: Sellers must often disclose any mechanical problems with the HVAC system, air conditioning, or plumbing systems to avoid confusion about the state of the household system.
  • Flooding: Any past water damage, whether from a storm or a leaky pipe, should be disclosed, as it may lead to health issues like mold or structural concerns.
  • Homeowners Associations (HOA) Information: If the property is part of an HOA, this disclosure covers fees, rules, and recent assessments. Leaving out HOA requirements could affect the lender’s decision and ultimately impact the purchase price.
  • Pest Problems: Issues like termites or other infestations should be brought to light. Certain states, such as Michigan, have pest disclosure laws to keep things transparent.
  • Legal Issues: Any property liens, bankruptcies, or boundary line disputes must be disclosed. Not sharing these can lead to real estate litigation, which nobody wants.

Disclosures for For-Sale-By-Owner (FSBO)

Selling on your own? FSBO sellers still have to follow disclosure basics just like anyone else. While a real estate agent usually helps navigate these waters, FSBO sellers need to do a bit more legwork.

A Real estate attorney or state rules can provide guidance on which forms to use and which issues to disclose.

Timing of Property Disclosures

A person signing on a seller's disclosure statement

When do you need to disclose? Timing varies, but there are two common approaches:

  • Before Listing

By disclosing known issues up front, potential buyers have a clear picture before they even make an offer. This can help avoid negotiating headaches later on.

  • After Accepting an Offer

After a potential buyer has submitted a fair cash offer, sellers usually have a few days to submit disclosures.

An inspection during this period helps confirm the property’s condition. For homes with lead-based paint (built before 1978), federal laws give buyers a 10-day period to check for potential hazards.

Situations Where Disclosure May Be Skipped

Sometimes, sellers can skip disclosures in specific situations, like bank-owned homes, foreclosures, transfers between family members, or business transfers between co-investors. Always check state laws to ensure you’re not missing anything essential.

Consequences of Failing to Disclose

Failing to disclose can spell big trouble. Disclosure laws exist to protect buyers, and if a seller fails to disclose something significant, it can lead to legal trouble, from fines to canceled sales.

Non-disclosure can backfire, even if the disclosure wasn’t legally required, and it may ultimately cost sellers more than just the hassle.

The Role of Home Inspections

A home inspection serves as a second set of eyes, verifying the seller’s disclosure. Inspections cover multiple pages of information, checking structural issues, mold, and mechanical problems.

They help potential buyers understand what they’re getting into and catch any environmental hazards that might have slipped through the seller’s disclosure.

Ethical Duties of the Seller

A person handing another person a key

Sellers have an ethical duty to be open about what they know. Beyond just following state laws, sellers should be honest about any property changes, disclosed leaks, and specific forms like the lead warning statement.

Transparency builds trust with buyers and keeps things fair. Sellers who skip disclosures can face real estate litigation and might damage their reputation in the process.

Final Thoughts on Common Real Estate Disclosures

Disclosures are the bedrock of any real estate transactions. They help avoid confusion, protect both buyer and seller, and make the entire process smoother.

Whether you’re buying or selling, don’t underestimate the power of disclosure documents—they’re your key to a straightforward and fair deal.

FAQs

The most common disclosure in real estate is the Seller’s Disclosure, which outlines defects, hazards, and material issues with the property, ensuring transparency and protecting both buyer and seller.

Yes, in most cases, sellers are legally required to disclose known issues with their homes, as state and federal laws mandate transparency to protect buyers.

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