When putting your home on the market, it’s usually preceded by a few months of making much needed home improvements. Nothing fancy but possibly a few new coats of neutral paint, fixing the leaky faucet or shampooing the rugs. The goal is to show the property at its best, but sometimes our underlying intention is to hide some of the real problems that may be present.
As a realtor, it’s my job to help my clients navigate when buying a home by double and triple checking disclosure documents to make sure that new coat of paint isn't hiding something more serious. When assisting my clients who are selling their home, I stress the importance of fixing major problems or being honest and disclosing relevant information to potential buyers. Overall, it’s the seller’s obligation to disclose any issues, and it’s the buyer’s responsibility to be completely aware of past problems before signing on the dotted line.
Whether you’re a buyer or a seller, here are three things you should know about real estate disclosures.
1. What is a disclosure?
Disclosure statements, which can come in a variety of forms, are the buyer’s opportunity to learn as much as they can about the property. The rules regarding disclosure vary from province to province, but in most, a seller is required to inform the buyer of the general health of the property, which includes everything from leaky windows to a roof that needs replacing.
Disclosure is in the best interest of both the buyer and seller because the documents serve to inform buyers, but also can protect the seller from future legal action. Ultimately, it is the seller’s opportunity to lay out anything that can negatively affect the value, usefulness or enjoyment of the property.
2. Is a disclosure the same as an inspection?
A disclosure is a document prepared by the seller for the buyer which simply outlines the basics of the property. It is definitely not the same thing as a home inspection, because there are things the seller may not be aware of that an inspection brings to light. It should also be noted that having one does not mean you should forego the other.
An inspection will review the property from top to bottom. The purpose of an inspection is to identify the health of the property and to bring forth any glaring issues such as a furnace that may soon reach its life span or a crack in the foundation that could require maintenance in the near future. So in theory, an inspection will basically verify the information in the disclosure and may bring to light issues that the seller was not aware and therefore did not include in the disclosure.
3. What do sellers disclose to potential buyers?
Any additional improvements or upgrades a seller has done to their property are usually put in the disclosure document. Other common disclosures include the existence of pets, termite problems, and any defects or malfunctions with major systems or appliances. Failure to disclose can result in a messy conflict with the buyer after the sale.
Above all, if you are considering selling your home, be prudent and collect all the details and necessary information to properly disclose. Your real estate agent will assist you, and make sure you know your rights when it comes to assessing and disclosing your real estate.