Disclosure Duties: What You Must Reveal Even in a Private Real Estate Sale Among Friends
What are disclosure duties? Selling a house privately, especially to friends or family, seems simpler than going through the traditional real estate market. You may think you can skip some of the usual steps and rules. But even in these more relaxed settings, you still have important legal responsibilities to consider. One of the key responsibilities is disclosing any known problems with the property. Intentionally hiding or even just failing to disclose known issues can land you in a lot of legal trouble.
What Are Disclosure Duties in Real Estate?
Real estate disclosure duties require a seller to tell a buyer about any known problems or defects with the property. If there are issues that could affect the property’s value or safety, it’s not just nice to tell them—you are legally required to do so. For example, if the roof leaks, the plumbing is faulty, or the electrical systems are not up to code, you must tell the buyer. Other things you may need to disclose include the presence of hazardous materials like asbestos or lead paint.
Why does this legal requirement exist? Consider how an unethical seller may act if they weren’t required to tell buyers about defects in a property. They could find out about a costly defect in their property, offload it to a trusting and unknowing buyer, and make off with their money without consequence.
It’s there to provide the buyer with all the necessary information they need to make an informed decision. If you fail to disclose issues you knew about, you could face legal disputes and financial penalties. You may think this isn’t a concern when you’re selling to family or friends, but things are different when there are hundreds of thousands of dollars on the line.
When you sell a property, you typically provide a written disclosure statement. This document should outline any known defects or issues with the property. Even if the problem seems minor or has been fixed, it’s still important to include it in your disclosure. Working with a real estate lawyer can help you verify that you are fulfilling your legal obligations throughout this process.
What Makes Private Sales Different from Standard Real Estate Sales
In a private real estate sale, the process often involves only the buyer and seller, without a real estate agent. This can make the transaction faster and more straightforward. On the flip side, it also means that both sides have to handle everything on their own, from negotiations to legal paperwork. This can be a lot, even for people who have bought and sold multiple properties. The amount of paperwork and legal documentation needed for a property sale is overwhelming.
Without a real estate agent on either side, both the buyer and seller need to be extra careful to make sure everything is done correctly and protect themselves against liability. The buyer should ask questions about the safety and age of different parts of the home, and the seller should provide a thorough and accurate disclosure statement. It’s often helpful for both sides to have their own legal representation to protect their best interests during this process.
Your Disclosure Obligations in a Private Real Estate Sale
Even when selling a house privately, you must still let the buyer know about any problems with the property. This requirement is important for maintaining transparency and trust. As the seller, draft a written disclosure statement that outlines any known defects. It’s a good idea to keep all these disclosures in writing to avoid any misunderstandings later on.
Even if you disclose something to the buyer in conversation, that may not be enough to fulfill your legal obligation. Remember, you’re protecting yourself against potential legal issues. Should you end up in front of a judge because the buyer claims you misled them and withheld important information, you will want proof that you told them about problems with the property.
If you’re unsure about what needs to be included in your disclosure, consulting a real estate attorney can be very helpful. They can provide you with the guidance needed to ensure you’re meeting all legal requirements. Doing so not only keeps you on the right side of the law but also helps build a smoother and more honest transaction process.
