Whether you are buying or selling a home, you may have heard the term full disclosure. In large financial transactions this is an important detail that can save the seller from legal troubles in the future. Fully disclosing all the details of your property is required to avoid a future lawsuit if your buyer finds these problems. But what should be included in full disclosure? Who is responsible for disclosing the details; the seller or agent? Here is a rundown of what full disclosure entails and who is responsible.

Full Disclosure Responsibility

Its easy to imagine placing blame of future legal problems on your real estate agent if your buyer finds a water leak, bad roofing, or termites after the sale. However, nobody knows your home the way you do, not even your agent, and if these problems were not found and disclosed, the blame falls on the seller. In many cases, problems discovered later that were not fully disclosed during sale can be handled out of court at the expense of the seller. However, investigations are often needed and proof that the problem was pre-existing before sale would be required before any action can be taken. If the previous owner mentioned a leaky roof to the neighbor and never warned the buyer about it, then it is the previous owners responsibility to fix it or face a lawsuit.

What is Often Included in a Full Disclosure?

No home is perfect. After years of living in a house you are likely to learn its quirks. The faucet may drip, there may be a draft coming from the living room window, or the water heater may not work on Saturdays, regardless of what the quirk is, it must be disclosed to future buyers.

Prior to sale, a full disclosure statement must be prepared and signed off on. This will include everything you know about your property, the neighborhood and any problems that may deter a buyer from purchasing the home. Some of the most common inclusions are:

Termites, bugs, snakes, and other infestations.

Problems in the neighborhood, such as loud neighbors, construction, weird smells

Leaks, property damage, bad wiring, other home repairs needed.

Property history to include, past crimes on the property, unsavory past owners, murders, etc

Paranormal activity: In NY case in 1991, a buyer was able to back out and get his deposit returned because the seller did not disclose the haunted reputation of the home

How to Prepare a Full Disclosure

As you prepare to sell your home, it is important to start your full disclosure list early. Start with problems you already know about. From doors that stick to the appearance of summer ants in the yard, write down every little quirk you know. The next step would be a full inspection. The cost of an inspection is worth saving the cost of a lawsuit later. The inspector will inform you of any structural damage that should be included in the disclosure. There may even be issues you were unaware of that can be easily repaired prior to sale and increase your asking price.

It seems full disclosure is meant to protect the buyer from purchasing a money pit, however the true protection goes to the seller. Simply creating a list of possible problems and being honest with your buyers can keep you out of court as well as keep your money in your pocket. If issues are still discovered after the sale and are proven to be pre-existing, it is often cheaper to own up to the problem and take care of it out of court.

Sheila Madison is a frequent real estate blogger who suggests all sellers find a real estate agent they can trust fully to avoid problems in the future.