Association Information

If the home or neighborhood is governed by a home owners’ association (HOA) you should disclose that fact. You also need to know about the HOA’s financial health and provide this information to the buyer so that he or she can make an informed purchasing decision. Or if  the home is part of a historic association, buyers will need to know if the home is in a special historic district because it will affect their ability to make repairs and alterations, and it might also increase the cost of those activities.


Repairs and Lists of Items

Buyers need to know the home’s repair history so they can have their home inspector pay extra attention to problem areas and be aware of probable future issues. Texas law, for example, requires sellers to disclose previous structural or roof repairs; landfill, settling, soil movement or fault lines; and defects or malfunctions in walls, the roof, fences, the foundation, floors, sidewalks and any other current or previous problems affecting the home’s structural integrity. You may also need to disclose electrical or plumbing repairs and any other problems you would want to know about if you were going to buy the home and live in it.

Some states, like Texas and Michigan, will require sellers to disclose whether the property comes with a long list of items, including kitchen appliances, central air conditioning and heating, rain gutters, exhaust fans and water heaters.

Water Damage

When water gets in where it shouldn’t, it can damage personal possessions, undermine the home’s structure and even create a health hazard if it encourages mold growth. Mold is not always a bad thing though; it is usually an easy fix and will turn off other potential investors. Sellers should disclose past or present leaks or water damage. Michigan, for example, requires sellers to disclose evidence of water in a basement or crawl space, roof leaks, major damage from floods, the type of plumbing system (e.g., galvanized, copper, other) and any known plumbing problems. It can be difficult to know about water problems (and many other types of problems) if you’re flipping the home and only own it for a month or two.

Just always keep in mind that there are many risks for flippers or investors when closing on a rehabbed property. Some things might not have been obvious on your initial walk-through when you were filling out your Property Repair Estimate Sheet, particularly if it was in winter or during a dry spell. With both situations can be concealed. In situations such as these, check to see how much protection your state’s laws offer from disclosing information you would have had no way of knowing.

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Why was this not disclosed to you? Do you have to disclose this to your potential buyers? Reality is rules are different in each state. Here’s what we would suggest.

1. Death in the Home

Some buyers may have concerns or superstitions about purchasing a home in which someone has died, so it’s important to know if your state requires sellers to disclose a previous death in the home. Keep in mind each state will have slightly different requirements for disclosure. A seller is required to disclose deaths related to the condition of the property or violent crimes though. For example, if a previous occupant’s child drowned in the swimming pool because it didn’t have the proper safety fence, the seller would need to disclose the death even after remedying the safety issue by installing a proper pool enclosure. There are, however, circumstances where sellers do not have to disclose a death on the property.

There are no states in which there is an obligation to disclose the death of a person who has deceased under natural conditions though. But even when disclosure isn’t required – for example, Georgia does not require the disclosure of homicide or suicide – you may want to err on the side of giving the buyer notice of a death on the property. You would want to know, right?  Remember how you learned of the suicide? They will hear about it from the neighbors anyways.

2. Neighborhood Nuisances

A nuisance is a noise or odor from a source outside the property that could irritate the property’s occupants. If you are investing in North Carolina, that state requires sellers to disclose noises, odors, smoke or other nuisances from commercial, industrial or military sources that affect the property. Michigan requires sellers to disclose farms, farm operations, landfills, airports, shooting ranges and other nuisances in the vicinity, but Pennsylvania leaves it up to the buyer to determine the presence of agricultural nuisances.

3. Environmental and Natural Hazards

If the home is at an increased risk of damage from a natural disaster or has known or potential environmental contamination, you may be required to disclose this information to the buyer.

Texas law requires sellers to disclose the presence of hazardous or toxic waste, asbestos, urea-formaldehyde insulation, radon gas, lead-based paint and previous use of the premises for the manufacture of methamphetamine. 

New York’s Property Condition Disclosure Act requires sellers to notify buyers about whether the property is located in a flood plain, wetland or agricultural district; whether it has ever been a landfill site; if there have ever been fuel-storage tanks above or below ground on the property; if and where the structure contains asbestos; if there is lead plumbing; whether the home has been tested for radon; and whether any fuel, oil, hazardous or toxic substance has been spilled or leaked on the property. 

 California’s Natural Hazards Disclosure Act requires sellers to disclose whether the property is in a seismic hazard zone and could therefore be subject to liquefaction or landslides after an earthquake. 

While most disclosure requirements are governed by the states, the federal government mandates one: the disclosure that lead-based paint may be present on any property constructed before 1978. 


Check in next week for What You Must Disclose Part 2!


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