In the United States, it’s generally required for sellers to disclose any known issues with a property when selling.
In states that follow the “buyer beware” (or caveat emptor) principle for real estate transactions, sellers still often benefit from voluntarily sharing information about their property before reaching an agreement with a buyer. This disclosure process is separate from a home inspection, which typically occurs after the contract is signed and before the closing date. A home inspection may not uncover every issue, so upfront transparency is crucial.
The Disclosure Process: Key Points to Know
There’s a document for that.
In most states, real estate agents provide sellers with a form to disclose known material issues. These may include the property’s condition, hazards such as lead-based paint or flood risks, and legal concerns like code violations. In some states, the form is mandated by law, while in others it’s created by local real estate associations.
Disclosure Requirements Vary by State
States like Colorado and California have specific regulations requiring sellers to disclose certain facts before a transaction proceeds. For instance:
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Colorado, with its mining history, requires sellers to notify buyers if a third party has rights to mine minerals on the property.
- South Dakota also requires sellers to inform buyers of any deaths or suicides that took place during their ownership.
Buyer Beware: When the Burden Falls on the Buyer
In eight states, including Alabama and Georgia, the caveat emptor principle applies. According to Nolo.com, this means the buyer is responsible for asking the right questions and performing due diligence before purchasing.
“I believe the reasoning behind that is that the buyer is in the best position to understand their priorities and assess the level of risk they’re comfortable with,” explained Erin Kormann, discussing how disclosure is handled in Virginia real estate. “It essentially places the responsibility on the buyer to conduct research.”
But Sellers Still Have Some Obligations
Even in buyer beware states, sellers must often disclose known issues:
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In Alabama, sellers must inform buyers of known problems such as fire damage.
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In Massachusetts, they must disclose the presence of a septic system.
In Virginia, sellers are given a disclosure form that outlines potential concerns buyers should investigate. While sellers are not required to disclose every detail, they must inform buyers of certain facts—such as:
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Pending building or zoning code violations
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Ownership disputes
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Past methamphetamine production on the property
Even if the seller learns of an issue after the contract is signed, they are still expected to disclose it before closing.
Lead-Based Paint Disclosure Is a Federal Requirement
Unlike other risks, lead-based paint disclosure is federally mandated. According to the U.S. Environmental Protection Agency (EPA), homes built before 1978 may contain this hazardous paint.
Pest Issues Must Be Disclosed
In many states, including Michigan, pest problems—especially from wood-damaging insects like termites and carpenter ants—must be disclosed to potential buyers, even if the issue has already been addressed. This requirement is based on guidelines from the Greater Lansing Multiple Listing Service.
Health Hazards Like Asbestos and Radon
Health risks like asbestos (previously used in insulation and pipe wraps) must also be disclosed if known. In some states, sellers are required to inform buyers about radon gas if it’s been detected. For example, in Florida, sellers must provide a disclosure statement about radon, even if they aren’t aware of its presence.
Additionally, sellers must disclose any mold or moisture issues they are aware of on the property.
Disclosing Flood Risks
If a property is located near a body of water—such as a river, lake, or ocean—buyers should ask for a written flood risk disclosure if it’s not already provided. As of 2024, North Carolina began requiring such disclosures, and 35 other states have followed suit, according to the Federal Emergency Management Agency (FEMA).
Honesty Is a Moral and Legal Obligation
In buyer beware states, even if full disclosure isn’t legally required, sellers and their agents must respond truthfully when asked direct questions about the property. If a seller hides critical information, they may be subject to legal consequences for contract violations or fraud.
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