Most states have strict rules when it comes to the information the seller is required to share with the potential buyer before a real estate transaction. The property disclosure statement is the form these requirements take, and there are many variants, depending on the state.
The goal of these seller disclosure forms is to make sure the buyer is fully aware of any defects or risks the property presents, so they can make an informed decision. Even if the parties don’t sign such a purchase agreement, the seller still needs to present the disclosure statement to the buyer when they make the offer, or preferably before that moment.
What Is a Property Disclosure Statement?
The property disclosure statement is a formal document that authorities demand in most states before closing a real estate deal. It’s written proof of all the flaws or dangers the property may present, and all the negative aspects that may make the buyer reconsider their decision.
It’s a safety measure for the buyer so that they know exactly what the seller is offering, and they can avoid future unpleasant surprises.
The seller disclosure form mentions everything from a material defect to the property being positioned in a dangerous zone, or near a military base, and even if it was formerly used as a methamphetamine lab. Anything that presents a hazard or that can make the property less attractive in the eyes of buyers must be disclosed in this form.
Download A Template For Property Disclosure Statement
Leave all your worries behind by downloading our property disclosure statement template and filling in the necessary details before you are about to make a deal in the real estate business. Save yourself from future trouble and download our free-to-use template today.
How the Property Disclosure Statement Works?
No real estate transaction can be finalized without the disclosure statement being presented to the interested buyer. It’s the seller’s responsibility to thoroughly check the property and look for any defect or malfunction, anything that can be a source of danger or can affect the value of the property.
There are two aspects that must be considered. On the one hand, they must find and report any material damage to the property, like a leak or an electrical problem.
On the other hand, the seller must mention in the residential property disclosure form any aspect connected to the area where the property is located or former uses of the property that can influence the buyer’s decision. Any health or safety risk, as well as anything that can decrease the price of the property, for whatever reason, must be declared.
The seller has to take this part of the purchase very seriously. In some states, failing to disclose negative aspects of the property is punished by the law. To make sure they don’t become liable, they must check all the property in detail. Flaws are unlikely to pass unnoticed since buyers usually choose to bring their own home inspector to inspect the premises.
In case the buyer has made an earnest money deposit, and they discover that there are defects on the property that haven’t been mentioned in the disclosure statement, they have the right to receive their deposit back.
Certain states are exceptions from these rules, as they use the buyer Beware clause. That means that in those states, the seller has no responsibility to disclose or repair any damage, and the buyer agrees to buy the piece of real estate as it is.
What Information Should Be Included in a Property Disclosure Statement?
Since the seller disclosure form is required by the law, it needs to be carefully written to make sure it’s complete, and all the relevant aspects are covered. The best way to write your property disclosure statement is with the template we provide at CocoSign.
You can choose whatever type of file you prefer, PDF or Word. These are the main elements you need to make sure are included in the disclosure statement:
- The seller’s full name
- The address of the property
- Ownership details: what type of property it is, when it was built, how long it has been in the seller’s possession, how long they have actually lived on the property, and so on
- Details on the utilities the property has: water supply, sewage disposal, heating, air conditioning, and hot water
- Details on the physical structure of the property: foundation, basement, roof, plumbing system, electric systems, insulation, exterior drainage, the presence of wood-destroying insects, the carbon monoxide alarm, hazardous materials, fire sources (like chimneys)
- A detailed history of the property, mentioning if there were any Zoning violations, wrongful uses or other violations
- If the seller has made improvements on the property, they must mention them in the disclosure statement
- Any dangers and restrictions regarding the location must be disclosed (if it’s a flood zone, for example)
- Any illegal activities, as well as any murder or suicide that took place on the property, must be disclosed
- Names and signatures of the buyer, the seller, and the agent
Download A Template For Property Disclosure Statement
Leave all your worries behind by downloading our property disclosure statement template and filling in the necessary details before you are about to make a deal in the real estate business. Save yourself from future trouble and download our free-to-use template today.
Conclusion
The disclosure statement is an excellent measure taken by the state to protect potential buyers in the real estate field. Buildings often hide severe defects that can affect the new owners’ health, or the price the seller asks for may not be justified.
So before closing the deal, or even before placing an offer, the buyer is entitled to receive a seller disclosure form, covering all the essential aspects of the property and revealing all the negative aspects.
If you need to write a real estate disclosure form, try the template we have at CocoSign. We offer a wide range of useful templates for all the documents people usually need, and they are all user friendly.
DOCUMENT PREVIEW
Accurate Survey of the Property? ☐ No, ☐ Yes, ☐ N/A
Dates Lived on the Property: ____________, 20___ to ____________, 20___
Other Comments: _______________________________________________________
II. WATER SUPPLY.
Type: ☐ - Public ☐ - Well ☐ - Other ________________________
Any Issues with the Water? ☐ No, ☐ Yes, the issues are: ______________________
______________________________________________________________________
Any Water Treatment Systems? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A, ☐ Leased
Any Fire Sprinkler Systems? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A, ☐ Leased
Fire Sprinklers in Operating Condition? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
III. SEWAGE DISPOSAL.
Type: ☐ Public, ☐ Septic, and approved for ____ (#) of Bedrooms.
Septic Systems Functioning Properly? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Last Time the Septic System was Pumped? ____________, 20___
Other Comments: _______________________________________________________
IV. HEATING.
Type: ☐ Oil, ☐ Natural Gas, ☐ Electric, ☐ Propane, ☐ Other: ____________________
Is Heat Supplied to All Finished Rooms? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Are the Systems in Operating Condition? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
V. AIR CONDITIONING.
Type: ☐ Oil, ☐ Natural Gas, ☐ Electric, ☐ Propane, ☐ Other: ____________________
Is AC Supplied to All Finished Rooms? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Is the AC System in Operating Condition? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
VI. HOT WATER.
Type: ☐ Oil, ☐ Natural Gas, ☐ Electric, ☐ Other: ____________________
Are there any Known Issues with the Plumbing System? ☐ No, ☐ Yes, Explain: ______
______________________________________________________________________
Other Comments: _______________________________________________________
XI. ELECTRIC SYSTEMS.
Any Known Issues with the Electrical System? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XII. INSULATION.
In Exterior Walls? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
In Ceiling/Attic? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Under the Floor? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
In any Other Areas? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XIII. EXTERIOR DRAINAGE.
Water Stand on the Property after a Heavy Rain? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Are Gutters and Downspouts in Operating Condition? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XIV. WOOD-DESTROYING INSECTS.
Any Known Infestations and/or Prior Damage? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XV. CARBON MONOXIDE ALARM.
Is a Carbon Monoxide Alarm on the Property? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XVI. HAZARDOUS OR REGULATED MATERIALS.
Are there any Hazardous or Regulated Materials located on the Property, including, but not limited to, mold, asbestos, radon gas, lead-based paint, licensed landfills, methamphetamine labs, underground storage tanks, any mining operations or other past contamination on the Property? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XVII. FIRE.
Any Fireplaces, Woodstoves, or Chimneys? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Are there any Restrictions on the Property? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XXII. MINERAL RIGHTS.
Are there any Mineral Rights on the Property? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Do you Own the Mineral Rights? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XXIII. MURDER / SUICIDE.
To your knowledge, has there ever been a murder or suicide within the boundaries of the Property? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XXIV. ILLEGAL DRUG OR CRIMINAL ACTIVITY
To your knowledge, has there ever been illegal drug or criminal activity within the boundaries of the subject property? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XXV. MATERIAL DEFECTS.
Are there any Material Defects, including latent defects, affecting the physical condition of the Property? ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XXVI. STRUCTURAL SYSTEMS.
Are there any defects with other Structural Systems on the Property? (including but not limited to, exterior walls, floors, driveways, sidewalks, etc.) ☐ No, ☐ Yes, ☐ Unknown, ☐ N/A
Other Comments: _______________________________________________________
XXVII. ADDITIONAL DISCLOSURES.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
