Three Seller Disclosure Red Flags include:
- Handwriting is not legible. In most cases seller disclosures are handwritten. For this reason, be sure to check that the seller’s handwriting is legible. The seller is not protected if the writing is not readable.
- Generalizations and vague responses. Check that description of remodeling, repairs, or modifications to the property have been described in detail. Vague or general descriptions can be perceived as suspicious and make the seller vulnerable.
- Many “Do not know” responses. Most seller disclosure forms provide the seller with the ability to select from a list of answer options including:
1) Non/Not included,
3) Not Working
4) Do Not Know
When a seller does not know if something is working or not, he/she should rightfully select, “Do not know” if the working condition is unknown; however, some sellers mistakenly conclude that a “do not know” response protects them from liability, so they select this option in a divergent effort to withhold potentially negative information to the buyer. If this is happening, it should be addressed to help avoid potential complications in the transaction process and future legal liabilities.
Seller Disclosure Form Review
After the seller disclosure form has been completed, the real estate professional should carefully review it to ensure there are no areas of concern. Although this process may seem like you’re going above and beyond the call of duty, it will play a significant role in ensuring that you and the seller will not experience any legal entanglements after the transaction process has been completed.
Specific items to address may include:
- Modifications to the property as a result of warranty claims
- Recurring maintenance (e.g., sewer clean-out, tree or pest control services)
- Repairs and/or alterations (e.g., recent painting, tile work, alterations to the foundation, etc.)
- Defects (including past defects) in structural components of the property such as a chimney, foundation, drainage systems, and appliances
- Disaster/financial relief, insurance or civil settlements (e.g., shifting of the foundation as a result of an earthquake or flood)
- Other mold or water issues
- Damage to the property as a result of animals, pests or soil movement.
- Encroachments and easements
- Title pending or past lawsuits
- Neighborhood noise, traffic congestion, odors, and conflicting area zoning issues (e.g., residential next to commercial zoning)
- Governmental factors such as annexation, zoning modifications, historical designation, and protected habitat.