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Sure, you've heard the old saying: "Buyer beware." But in today's litigious legal world, sellers can't afford to take a purely passive approach to real estate defects. Even an "as-is" contract won't protect you if you knowingly conceal information from a potential buyer. If you know there's a problem with your property, it's up to you to point it out — or face a costly legal claim!
Just what kinds of problems should you disclose? Anything that's "material" — that is, that might make a difference to the buyer. Be sure to disclose in writing such items as:
- Plumbing or electrical defects;
- Safety concerns or potentially hazardous conditions, such as an abandoned well or asbestos insulation;
- Additions or alterations made without a building permit; and
- Encroachments or fences not on the property line.
Ask your realtor about other legally required disclosures in your area. In some states, you may be required to disclose the fact that a violent crime has occurred on the property, or to notify buyers about the availability of a list of registered sex offenders. Other mandated disclosures may include seismic activity reports, earthquake readiness, and other data. State law may also prevent sellers from having to disclose that a previous resident had AIDS.
Remember that your best protection against future claims is always a full and honest disclosure. If you have questions talk to your realtor.
TIP: Make sure you put all disclosures in writing, even if you also discuss a matter with the buyer in person. Your realtor can assist you by providing a disclosure form.