Disclosures Important In Selling Property
Posted by David Rosenfeld on Sep 23, 2012 - 11:53:06 AM
LOS ANGELES—It’s not fun telling people about your problems. But it’s required by law when it comes to disclosing problems with your home or property that you plan to sell.
Potential buyers will always have questions about your property, so it’s important to be as upfront as possible when it comes to questions about possible problems. Many of these can be resolved for the most part, so don’t be shy about disclosing problems. It’s better to deal with them now rather than later when the buyer backs out of the deal or sues you for not disclosing certain issues.
For instance, it’s important to reveal that a bedroom was added to your home, even if you didn’t have the proper permits in place with the city. These issues are easy to learn if you’re the buyer, so be forewarned. At best, the seller may need to pay a fine. At worst, the room would have to be torn down and you may have to rebuild it.
Other additions like a new bathroom or re-roofing, for instance, would also need to be disclosed along with the accompanying documentation of permits and work done.
There are issues that may be easy to forget, but could also prove troublesome if forgotten, such as having had termite damage or flooding from an old water heater. These could very well result in a liability claim if more damage occurs after the new buyers move in.
It’s better to be safe than sorry when it comes to fully disclosing problem areas with your property. Possible buyers generally have a laundry list of questions about the property you’re trying to sell, so be ready for this and provide as much information as possible. Many people understand that no property is perfect, so your candidness is often appreciated by buyers.
If you live in a condominium complex, many potential buyers will have many of their questions answered by the condo associations, covenants,and bylaws which outline insurance coverage. They will cover whether or not you can have pets and how often the property is checked for termites.
Buyers can also request a package from your insurance company about the number of claims filed in the last five years on the property.
You also have to be cognizant that purchasing a home or property is an emotional decision with the buyer. They will need to know about problems with the area and neighbors, as well. You must reveal if you’ve had problems with noise or loud parties or other police issues in the neighborhood. If you’re close to a freeway or railroad tracks with a lot of noise, you should disclose this. You also must disclose if you’ve had any major problems with your neighbors.
Many times potential buyers will ask if anyone has died in the home. For religious or other reasons, this question is often asked and its answer could dissuade some from a purchase. Years ago, most people died in their own homes. But today, most people pass away in hospitals or in hospice care and for many this is not a major issue.
Potential buyers are encouraged to hire a company to do full home inspection since many don’t have the expert eye to see possible problems. But in the end, disclosures, both good and bad, will benefit you both.
David Rosenfeld is a Real Estate broker and president of Advantage Real Estate, a Real Estate and investment firm in Santa Monica, and a Rotary Club member. He has more than 20 years experience in commercial and residential property investments and financial counseling.