If you're selling a home, one of the most important responsibilities is disclosing adverse material facts. These are significant defects or issues that could negatively impact the property's value or a buyer's decision to purchase.
What Are Adverse Material Facts?
Adverse material facts are problems with the property that a reasonable buyer would consider important when deciding to purchase. Examples include:
- Structural issues like foundation cracks or roof damage
- Water damage, mold, or pest infestations
- Plumbing or electrical problems
- Environmental hazards such as lead paint or asbestos
- Neighborhood issues like noise, flooding history, or nearby construction
- Deaths on the property (in some states)
- Pending legal issues affecting the property
Why Disclosure Matters
Disclosure protects both the buyer and the seller:
For buyers: It helps them make an informed decision about one of the biggest purchases of their life.
For sellers: It reduces the risk of lawsuits after closing. If you hide a known defect and the buyer discovers it later, you could face legal action for fraud or misrepresentation.
Transparency builds trust and facilitates a smoother transaction.
State and Local Laws Vary
Requirements for disclosure differ by state and sometimes even by municipality:
- Some states have standardized disclosure forms that sellers must complete
- Others rely on more general obligations to disclose known defects
- Certain disclosures (like lead paint in pre-1978 homes) are federally required
It's essential to know your local laws and comply fully.
Tips for Sellers
1. Be Honest
Only disclose facts you know. You're not expected to hire inspectors to find problems—but you must share issues you're aware of. Hiding problems can backfire badly.
2. Document Everything
Keep records of inspections, repairs, and communications. If you fixed a problem, document what was done and when.
3. Consult a Real Estate Professional
Your agent or attorney can guide you through state-specific disclosure requirements and help you complete the necessary forms correctly.
4. When in Doubt, Disclose
If you're unsure whether something needs to be disclosed, err on the side of transparency. It's better to over-disclose than face legal issues later.
The Bottom Line
Selling a home comes with legal and ethical responsibilities. Disclosing adverse material facts ensures a fair transaction, protects you from liability, and helps maintain your credibility as a seller. Transparency isn't just smart—it's essential.
Need help navigating disclosure requirements? Find a qualified broker who knows your local laws.