Mandatory Disclosures for FSBO Sellers in Maryland

Selling your Maryland home yourself, known as a “For Sale By Owner” (FSBO) transaction, holds the undeniable appeal of saving substantial commission fees. This financial incentive drives many homeowners to take on the roles of marketer, negotiator, and closing coordinator. However, this path also places the full weight of a complex legal and financial process squarely on the homeowner’s shoulders. Of all the responsibilities, none carries more potential for legal risk than navigating Maryland’s mandatory disclosure laws.

What Does “Disclosure” Mean in Maryland Real Estate?

In the context of a residential real estate sale, “disclosure” refers to the seller’s legal obligation to provide the buyer with information about the property’s condition and history. Maryland law is somewhat unique. It provides most sellers with two distinct paths: providing a detailed “disclosure” or offering a “disclaimer.”

This choice is the central component of Maryland’s real estate disclosure framework. It is formalized in a state-mandated document, and the path you choose dictates the representations you make to a buyer. However, as we will explore, choosing the “disclaimer” path does not, as many believe, create a legal shield that protects a seller from all liability.

The Maryland Residential Property Disclosure and Disclaimer Statement

The primary document for FSBO sellers is the Maryland Residential Property Disclosure andDisclaimer Statement. This multi-page form is the official tool for satisfying your base-level disclosure obligations. A seller must provide this form to the buyer on or before the time they enter into a contract of sale.

While this form is required for the vast majority of residential sales, there are specific exemptions. The requirement to provide this statement does not typically apply to:

The initial sale of a brand-new home that has never been occupied.
Sales conducted by a lender or in a foreclosure proceeding.
Transfers of property by a fiduciary in the course of administering an estate, guardianship, or trust.
Transfers between co-owners or close family members.
Properties that will be demolished after the sale.

For a typical FSBO sale, you should assume this form is mandatory.

Path A: The “Disclosure” Option

If a seller chooses the “disclosure” path, they will fill out several pages of the form in detail. This section requires the seller to provide information about the condition of the property’s various systems and components, based on their actual knowledge.

You will be asked to report on:

Structural Elements: The condition of the foundation, walls, and roof.
Key Systems: The operational status of the plumbing, electrical, and HVAC (heating, ventilation, and air conditioning) systems.
Water and Sewage: The source of water and the type of sewage disposal system.
Known Issues: Any known water penetration in the basement, defects in equipment, or hazardous materials like asbestos or radon (if known).
Property Details: Information about property line issues, easements, or community association memberships.

By choosing this path, you are making affirmative statements, or “representations,” about the home’s condition.

Path B: The “Disclaimer” Option (The “As-Is” Path)

Alternatively, a seller may choose the “disclaimer” option. By selecting this, the seller is explicitly stating that they are selling the property “as-is” and are not making any representations or warranties about its condition. This is the path many FSBO sellers are advised to take, as it limits the number of affirmative statements they make about the property.

However, this is the source of the single most dangerous misconception in FSBO sales. Choosing the “disclaimer” option does not, under any circumstances, protect a seller who actively conceals a known, serious, and hidden defect.

What are Latent Defects? The Non-Negotiable Disclosure

Even if you choose the “disclaimer” path and sell the home “as-is,” you are still legally prohibited from committing fraud. In real estate, this often relates to “latent defects.”

A latent defect is a material problem with the property that:

The seller has actual knowledge of.
The defect is not obvious and cannot be discovered by a buyer through a reasonably careful inspection.
The defect is significant enough that it would likely affect the buyer’s decision to purchase the home or the price they would be willing to pay.

Hypothetical examples of latent defects include:

Knowing that a basement corner floods during heavy rain, but only after you have painted over the water stains and put up new drywall to hide the evidence.
Knowing that a previous owner cut a key support joist in the crawlspace, and then covering the area to prevent an inspector from seeing it.
Knowing the chimney is structurally unstable but having it cosmetically “pointed” to look new, without fixing the underlying problem.

Actively concealing these types of issues is not protected by a disclaimer. This is misrepresentation, and it can lead to a buyer filing a lawsuit against you after the sale. The disclaimer form itself specifically warns sellers that it does not protect them from liability for non-disclosure of known latent defects.

Federal Requirement: The Lead-Based Paint Disclosure

Separate from any Maryland state form, federal law imposes a strict disclosure requirement for most homes built before 1978. The Residential Lead-Based Paint Hazard Reduction Act requires FSBO sellers of these older homes to perform specific actions.

As a seller, you must:

Provide the buyer with the official, EPA-approved pamphlet titled “Protect Your Family from Lead in Your Home.”
Disclose any known lead-based paint or lead-based paint hazards present in the home.
Provide the buyer with any records or reports you have related to lead-based paint.
Include a specific attachment in the sales contract to confirm these steps were completed.
Give the buyer a 10-day period (or other mutually agreed-upon time) to conduct their own lead-based paint risk assessment. The buyer can waive this right.

Failure to comply with this federal law can result in severe penalties.

Disclosures for Properties in HOAs or Condominiums

If your home is part of a Homeowners Association (HOA) or a Condominium regime, you have another significant and time-sensitive disclosure obligation. The Maryland Homeowners Association Act and the Maryland Condominium Act govern these sales.

You are legally required to provide the buyer with a “resale packet.” This packet is obtained from the association’s board or management company and includes a large volume of documents.

The resale packet typically contains:

The association’s governing documents (Declaration, Bylaws, and Rules).
The association’s current financial statements and budget.
Information about any pending lawsuits against the association.
A statement of any upcoming special assessments that have been approved.
A statement of the monthly fees and any outstanding violations for your specific unit.

The law gives the buyer a “right of rescission.” After receiving the resale packet, a condo buyer has seven days and an HOA buyer has five days to review the documents. If they find anything they do not like—from a restrictive pet policy to a poorly funded reserve account—they can cancel the contract for any reason and receive their full earnest money deposit back. As an FSBO seller, you must manage this process and its strict timelines.

What Other Issues Should an FSBO Seller Disclose?

Beyond the required forms, an FSBO seller must always act in good faith. This means being truthful when asked direct questions. Other issues that can create liability if handled improperly include:

Unpermitted Work: If you finished a basement, added a deck, or rerouted plumbing without obtaining the proper local permits, you must disclose this. Unpermitted work can cause title insurance issues and require the new owner to perform costly remediation.
Property Line Disputes: If you have an ongoing disagreement with a neighbor about the location of a fence, you must disclose this.
“Stigmatized” Property: In Maryland, sellers are generally not required to disclose if a property was the site of a death, felony, or other event that does not affect its physical condition. However, you must not lie if a buyer asks you a direct question about it.

What Happens if a Seller Fails to Disclose?

The consequences of failing to properly disclose a known, material defect can be severe. If the buyer discovers the problem after closing, they may have grounds to file a lawsuit against you.

Depending on the circumstances, a buyer may sue for:

Breach of Contract: If you made a representation in the contract that proved to be false.
Negligent Misrepresentation: If you should have known about a problem but failed to disclose it.
Fraud or Intentional Misrepresentation: If you actively concealed a known latent defect.

If a court finds you liable, you could be ordered to pay for the full cost of repairing the defect, the buyer’s legal fees, and in some fraud cases, additional punitive damages.

How Can FSBO Sellers Protect Themselves?

Managing disclosure risk is about diligence and honesty. As an FSBO seller, you can protect yourself by following clear rules.

Use the Correct, Current Forms: Do not download a form from a generic website. Obtain the latest version of the Maryland Residential Property Disclosure and Disclaimer Statement and the federal lead paint form.
Be Honest and Thorough: If you choose the “disclosure” path, be meticulous. If you choose the “disclaimer” path, remember it does not protect you from fraud.
Never Actively Conceal: Do not try to hide problems. A $50 can of “waterproof” paint to cover a foundation leak is a classic example of active concealment that can lead to a $50,000 lawsuit.
Organize Your Records: Gather all repair invoices, warranties, and permits. Providing these to a buyer is a sign of good faith and can be part of your disclosure.
Order the Resale Packet Early: If you are in an HOA or condo, order the resale packet as soon as you decide to sell. It can take weeks to receive, and you do not want it to delay your closing.
Get Legal Guidance: The most effective way to protect yourself is to have a knowledgeable attorney review your documents.

The Role of a Real Estate Attorney in an FSBO Sale

While you may be handling the sale without an agent, you should not handle it without legal counsel. A real estate attorney’s involvement is not a sales commission; it is a flat-fee or hourly service designed specifically to protect your interests and ensure the transaction is legally sound.

A real estate attorney working for an FSBO seller can:

Provide and explain all mandatory disclosure forms.
Draft or review the purchase and sale agreement to ensure it protects you.
Advise you on handling inspection-related repair requests.
Coordinate with the buyer’s title company.
Review the closing documents, including the ALTA statement (settlement sheet) and the deed.
Ensure the HOA or condo resale process is managed correctly.
Provide counsel on any non-disclosure or latent defect questions.

Securing Your FSBO Transaction

Selling your home “For Sale By Owner” can be a rewarding experience, but it is a high-stakes legal transaction. The key to a successful FSBO sale is not just finding a buyer, but completing the sale without incurring future liability. Maryland’s disclosure laws are complex and designed to protect buyers, placing a significant burden on sellers.

If you are considering a For Sale By Owner transaction in Maryland, do not navigate these legal waters alone. Contact our office to discuss your plans. We can provide the focused legal guidance needed to help you manage your risks, satisfy your legal obligations, and move forward with confidence.