4 Common Mistakes by Sellers on the Disclosure Notice

4 Common Mistakes by Sellers on the Disclosure Notice

Mistakes on the seller's disclosure are the #1 cause of home sale lawsuits

Mistakes on the disclosure notice can get you into hot legal trouble.  I know this because I have handled hundreds of lawsuits over disclosure issues in my career.  My thoughts below are taken from my actual experience of hearing sellers explain how and why they made mistakes on their disclosure notice that led them to a home sale lawsuit.

1.  Past or Present Issues

Some questions on the disclosure notice ask about current issues and some ask about previous issues.  Questions which specifically ask for previous issues can be tricky.  Many sellers mistakenly believe that if you had a problem that was fixed and currently functioning you should not have to disclose.  This is incorrect; if the question specifically asks about previous issues you must disclose even if the past issue was completely repaired and currently functioning.  This is true regardless of how long ago the previous issue occurred, and even if the seller did not own the property at the time the previous issue existed.

2.  Water

I previously represented a client who was a naval officer before becoming a general contractor. He once told me that water was the enemy of ship maintenance and repair. I believe the same can be said for house maintenance and therefore it is a critically important issue for home disclosure. A significant portion of the disclosure notice is dedicated to issues surrounding water, i.e. water penetration, flooding onto the property, flooding into the structure, flood insurance, improper drainage, wetlands on property, wood rot, and of course many, if not most, issues related to roofs and windows are about water leaks.  Sellers routinely fail to properly disclose roof and window leaks and water penetrating the house after heavy rains, leading to a home sale lawsuit.

3.  Room Additions or Structural Modifications Without Necessary Permits 

Due to the success and popularity of the DYI (do it yourself) home repair and house flipping television shows and the explosion of Home Depot and Lowes many more homeowners are taking on home repair and addition projects.  Unfortunately, most homeowners are not familiar with local building code requirements and they frequently perform home repairs without proper permitting. The disclosure notice specifically asks about room additions, structural modifications, or other alterations or repairs made without necessary permits.  Sellers either are not aware they made repairs that required permitting and thus do not disclose accurately or I believe more often the case is sellers are afraid to disclose the added rooms etc. without proper permitting and they take a chance it will not be discovered.

4.  Written Inspection Reports

Homeowners are much more transient than ever before. People move to new cities at higher rates and homeowners buy starter homes and continue to move up, and down, as they progress through life.  This increase in transactions has led to another common mistake by sellers regarding inspection reports. Some disclosure notices specifically ask sellers to provide any inspection reports they received in the preceding 4 years.  Sellers who purchase and sell within 4 years frequently forget to disclose the inspection report they received when they bought the property.

Mistakes on the disclosure notice are commonplace; however, they should not be.  As you can see from the above list, with some common-sense guidance these mistakes can be easily avoided.  This is exactly why Sellers Shield™ was founded.  We guide home sellers through their disclosures with our Gold Standard Disclosure Process, so that they can rest easy knowing that they’ve been given the easiest and most reliable way to fill out the seller’s disclosure form and prevent a home sale lawsuit from happening after the sale.

Written by Bo Blackburn

Sellers Shield™ Co-Founder and Chief Risk Officer

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