When buying a home, attractive features such as walk-in closets, a large kitchen, or a big yard are appealing, but they matter little if the property's physical condition or legal status is problematic.
Details about the legal status or physical condition of a home are called material facts. These are often issues that aren't obvious to a potential buyer just from looking at the home, for example an ownership claim by an ex-spouse or an encroaching structure on the property line.
Physical conditions that are material facts might include a leaking roof, termites, mold, or a foundation crack. Because disclosure laws vary by state, real estate professionals are a good source for what must be disclosed where you are buying.
If you prefer to get a formal insurance or agent review as part of assessing risk, you can also talk to an agent.
Typical property disclosures
- Leaking roof or foundation walls
- How old shingles and roofing materials are
- Mildew or mold damage
- Termite damage
- Sewer and septic system issues
- The square footage of the home
- Property taxes
- Any person with a pending property claim
- Any road plan that will subtract at least 10 feet from the front yard of the property
- Any structure on the property for sale that also falls on an adjacent property
- A home that's in the flight path of the local airport
- If any gas or oil tank is buried in the property
A disclosure form is useful for identifying legal or physical problems, but it shouldn't be the only precaution a buyer takes. After appraisal, hire a certified, licensed home inspector to examine the home for existing and potential issues.
The inspector will provide a written report detailing the inspection results, usually within a short period after the visit. For inspection-related coverage options and resources, see Pipeline inspection insurance.
Use the inspection report to decide whether to ask the seller to make repairs, to request a price reduction, or to cancel the purchase if the sale contract's contingency period allows. Allow enough time in your offer to review the inspection findings thoroughly.
If the home contains valuable furnishings or specialty items that concern you during a sale or move, consider reviewing coverage such as Miscellaneous Home Furnishings Insurance to protect those items during the transaction.
If the property will be used for a nonstandard purpose or is a unique facility, it may require specialized policies; for examples of specialty property coverage, see Homeless Shelters Insurance.
When negotiations over repairs or price adjustments fail and the buyer's contingency period still applies, the buyer may be able to cancel without penalty. As a final check, walk through the property about five days before closing to verify agreed repairs or that the home is in the expected condition.
Frequently Asked Questions
What is a property disclosure form?
A property disclosure form is a document completed by the seller that lists known material facts about the home's legal status and physical condition.
Do all sellers have to provide a disclosure form?
Disclosure requirements vary by state; many require a form, but the specifics of what must be disclosed differ by jurisdiction.
Should I still get a home inspection if the seller provided a disclosure?
Yes. A licensed home inspector can identify issues the seller may not have known about or disclosed.
What can I do if the inspection finds serious problems?
You can ask the seller to make repairs, request a price reduction, or walk away if your contract allows during the contingency period.