Disclosure Law
Real Estate Seller Disclosure Requirements
Seller disclosure laws require property owners to reveal known material defects and conditions that could affect a property's value or desirability. These requirements vary by state but are a universal exam topic.
What Must Be Disclosed
Most states require sellers to complete a standardized disclosure form (sometimes called a property condition disclosure or residential disclosure statement) covering known defects in structural systems, mechanical systems, environmental hazards, and legal issues.
A material fact is any information that would affect a reasonable buyer's decision to purchase the property or the price they'd pay. Known material facts must be disclosed even if not asked about directly.
Disclosure requirements typically cover: roof condition, foundation issues, water intrusion, plumbing and electrical systems, HVAC, known pest or termite damage, environmental hazards (lead paint, asbestos, radon, underground storage tanks), HOA information, easements, code violations, and pending litigation affecting the property.
Federally Required Disclosures
Lead-Based Paint Disclosure — required for all residential properties built before 1978
Megan's Law — sex offender registry notification (method and responsibility varies by state)
Flood Zone Disclosure — many states require disclosure if property is in a FEMA flood zone
Military/Airport Noise — some states require disclosure of proximity to airports or military installations
Disclosure FAQ
What is the difference between a defect and a material fact?
All material defects are material facts, but not all material facts are defects. A neighbor's pending development, a neighborhood drug house, or a disclosed easement are material facts that may not be 'defects' per se but must still be disclosed if they could affect the buyer's decision.
Does an as-is clause eliminate disclosure requirements?
No. Selling as-is means the seller won't make repairs — it doesn't waive disclosure obligations. A seller must still disclose known material defects even in an as-is transaction.
What is the agent's disclosure obligation?
Agents have an independent obligation to disclose known material facts, even facts the seller hasn't disclosed. An agent who knows about a material defect and remains silent may face discipline and civil liability.
What are the consequences of failing to disclose?
Failure to disclose can result in: contract rescission (buyer cancels the deal), civil lawsuit for damages, real estate license disciplinary action against the agent, and in cases of intentional concealment, fraud claims.