Real estate transactions have an abundance of documents and moving pieces. Among these documents and contracts are real estate disclosures, which play a crucial role in informing buyers about the condition and any potential issues related to a property. This article delves into the intricacies of real estate disclosures, their types, legal implications, and the responsibilities of both buyers and sellers.

Types of Real Estate Disclosures

Seller Disclosures

When selling a property, sellers are typically required to provide certain disclosures to potential buyers. These disclosures aim to inform buyers about the condition of the property and any known issues that could affect its value or safety. These documents are to be completed to the best of a seller's knowledge and provide buyers with valuable insight into the property they are purchasing.

1. Property Condition Disclosure

A property condition disclosure is a document in which the seller discloses any known defects or problems with the property. This may include issues such as structural damage, plumbing or electrical problems, or previous renovations done with or without permits. They can also disclose neighborhood "nuisances", if there was a death on the property, insurance claims, and more. Ultimately it is the seller's responsibility to disclose any known material facts about the property to the buyer. In California, these disclosures are the Transaction Disclosures Statement or "TDS" and the Seller Property Questionnaire or "SPQ".

2. Environmental Hazards Disclosure

In some jurisdictions, sellers are required to disclose information about environmental hazards that may affect the property, such as contamination from hazardous materials or proximity to industrial sites. This is typically accomplished by ordering a Natural Hazard Disclosure or "NHD report". These reports will provide buyers with insight as to what natural hazards may pose a risk to the property they are purchasing. These NHD reports will include information regarding flood zones, fire zones, seismic zones, and more.

3. Lead-Based Paint Disclosure

Federal law mandates that sellers of properties built before 1978 must provide buyers with a lead-based paint disclosure, informing them of any known lead-based paint hazards in the property.

State-Mandated Disclosures

In addition to seller disclosures, many states have specific disclosure requirements that sellers must adhere to. These requirements vary by state but often include disclosures related to natural hazards, environmental regulations, and other local concerns.

1. Natural Hazard Disclosure

Certain states, particularly those prone to natural disasters such as earthquakes, wildfires, or floods, require sellers to disclose information about the property's susceptibility to these hazards.

2. Megan's Law Disclosure

Some states require sellers to disclose whether the property is located near registered sex offenders, in compliance with Megan's Law.

3. Earthquake Disclosure

In earthquake-prone regions, sellers may be required to disclose information about the property's seismic safety features or any previous damage caused by earthquakes.

Federal Disclosures

In addition to state-mandated disclosures, there are several federal disclosure requirements that apply to certain properties or circumstances.

1. Lead-Based Paint Disclosure

As previously mentioned, sellers of properties built before 1978 must provide buyers with a lead-based paint disclosure, as mandated by the Environmental Protection Agency (EPA).

2. Radon Gas Disclosure

The EPA recommends that all homebuyers test for radon gas, a naturally occurring radioactive gas that can accumulate in homes and pose health risks. Sellers may be required to disclose radon test results to potential buyers. This can be very location specific though. San Diego for example is located in a zone with low amounts of Radon so it is often not tested for. However, states like Alaska, South Dakota, Pennsylvania, Ohio, Washington, Kentucky, Montana, Idaho, Colorado and Iowa are known to have higher levels of Radon and if you are a buyer purchasing in these states, you should strongly consider testing for Radon when purchasing.

3. Flood Hazard Disclosure

Properties located in flood zones or designated flood hazard areas may require sellers to disclose this information to buyers, as part of the National Flood Insurance Program (NFIP) requirements.

Legal Implications of Real Estate Disclosures

Failure to disclose known issues or hazards can have serious legal consequences for sellers. Buyers who discover undisclosed problems after purchasing a property may have grounds for legal action, including rescission of the contract, financial damages, or other remedies available under state laws.