Glossary · Agency & representation
Disclosure
Disclosure is the seller's obligation to reveal known material facts about a property's condition that could affect its value or a buyer's decision. Most states require a written disclosure form covering issues like the roof, foundation, systems, water damage, and past repairs. Rules vary widely, and failing to disclose a known material defect can create legal liability after the sale.
Also known as: Seller's Disclosure, Property Disclosure
How does disclosure work?
Sellers typically complete a written form listing known problems with the home's structure, systems, and history. Material defects the seller knows about and that a buyer cannot easily see generally must be revealed before the sale closes.
The form covers items like the roof, foundation, plumbing, electrical, heating, and any past water damage or repairs. Buyers use it alongside their own inspection.
Disclosure covers what the seller actually knows. It does not require sellers to inspect for hidden problems they are genuinely unaware of, though inspections may still reveal them.
Why does disclosure matter?
Disclosure protects buyers from unpleasant surprises and protects sellers from later lawsuits. An honest, complete form gives buyers the information to decide and helps shield the seller, and sometimes the agent, from claims of concealment after closing.
Hiding a known material defect can lead to legal liability, rescinded sales, or damages. Full disclosure is both an ethical duty and, in most states, a legal one.
What must sellers disclose, and does it vary by state?
Requirements differ significantly by state. Some follow mandatory disclosure with detailed forms, while others lean toward caveat emptor, or buyer beware. Certain items, like lead-based paint in homes built before 1978, carry specific federal disclosure requirements nationwide.
Because state rules range from strict to minimal, sellers and buyers should confirm local requirements. Even in caveat emptor states, sellers usually cannot actively conceal or lie about known defects.
The federal lead-based paint rule applies across all states for qualifying older homes, regardless of local disclosure law.
Worked example. For example, a seller knows the basement floods after heavy rain but the walls look dry during showings. In most states the seller must disclose this known, hidden defect on the property disclosure form. Staying silent to close the sale could expose the seller to liability if the buyer discovers it later.
Common mistakes with Disclosure
- Assuming caveat emptor lets you hide a known defect; even buyer-beware states usually forbid active concealment.
- Leaving a disclosure form vague or blank to avoid revealing problems, which can increase liability.
- Forgetting the federal lead-based paint disclosure required for homes built before 1978.
- Believing an inspection replaces disclosure; the two are separate and both protect the buyer.
- Treating your state's rules as universal, when disclosure obligations vary widely across states.
Fiduciary Duty
The legal obligation of an agent to act in their client's best interest above their own.
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A condition in a purchase contract that must be met for the sale to proceed.
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Any claim, lien, or restriction on a property that may affect its use or transfer.
Define TermListing Agreement
A contract between a seller and a brokerage authorizing the agent to market and sell the p
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