Legal Obligations When Selling a Property: What Sellers Must Disclose

25 May 2025

Selling a home? You might think it's as simple as finding a buyer, signing some paperwork, and handing over the keys. But hold on—there’s more to it. When selling a property, you have legal obligations to disclose certain information. Failing to do so could land you in serious trouble, including lawsuits or financial penalties.

So, what exactly must you disclose? Let’s break it down in simple terms so you don’t get caught off guard.

Why Property Disclosures Matter

Imagine buying a car, only to find out later it has a hidden engine problem the previous owner never mentioned. Frustrating, right? The same applies to real estate. Buyers have the right to know certain details about a property before making a purchase. Property disclosures protect buyers from hidden defects and, at the same time, shield sellers from legal disputes down the road.

What Sellers Must Disclose

Disclosure laws vary by state, but some common issues must be revealed regardless of where you're selling. Here's a list of key things you might need to disclose:

1. Structural Issues and Major Defects

Has your home suffered from foundation cracks, roof leaks, or termite damage? These are serious concerns that could affect the property’s value and safety. Even if you’ve fixed the problem, you still need to inform potential buyers about past issues.

2. Water Damage and Flooding History

Did your basement flood last year? Have you had recurring leaks or plumbing problems? Water damage can lead to mold, which is a huge red flag for buyers. Many states require sellers to disclose any history of flooding or water-related issues.

3. Lead-Based Paint (For Older Homes)

If your home was built before 1978, federal law requires you to disclose the presence of lead-based paint. Lead exposure can be dangerous, especially for children, so buyers must be told upfront.

4. Pest or Termite Infestations

If your home has a history of pest infestations—whether termites, rodents, or bed bugs—you should disclose it. Even if an exterminator has resolved the issue, buyers deserve to know about past problems.

5. Legal Disputes or Title Issues

Are there any pending lawsuits involving the property? Do you have boundary disputes with a neighbor? Any legal red flags could complicate the sale, so it’s best to disclose them upfront. Also, ensure there are no issues with the property title that could delay or void the sale.

6. Neighborhood Nuisances and Hazards

Is your neighbor notorious for late-night parties? Is there a nearby landfill that emits unpleasant odors? Buyers should be made aware of any environmental or noise-related nuisances that might impact their living experience.

7. Death in the Home

Believe it or not, some buyers want to know if someone has died in the home—especially if it was a violent or unusual death. Some states require disclosure of deaths within a specific timeframe, while others only mandate it if the buyer asks.

8. Previous Repairs and Renovations

Have you remodeled your kitchen or replaced the plumbing? While upgrades can be a selling point, you must disclose any major renovations—especially if they weren’t done with the proper permits. Unpermitted work could cause legal trouble for the new owner.

9. Asbestos, Radon, and Toxic Substances

If your home contains asbestos insulation, high radon levels, or any other hazardous materials, you may need to disclose these risks. Environmental hazards can pose significant health threats, so honesty is key.

10. Zoning Issues and Homeowners Association (HOA) Rules

Does your property have zoning restrictions that prevent certain modifications? Are there HOA fees or regulations that the buyer should know about? Make sure all these details are transparent before closing the deal.

What Happens If You Fail to Disclose?

Think you can get away with sweeping problems under the rug? Think again. If a buyer later discovers an undisclosed issue, they can take legal action against you. That could mean lawsuits, hefty fines, or even being forced to take back the property (in extreme cases).

In short, failing to disclose required information could cost you more than just your integrity—it could hit your wallet hard.

How to Properly Disclose Property Issues

1. Use a Seller’s Disclosure Form

Many states require sellers to complete a disclosure form that outlines property defects and concerns. Be honest and thorough—if in doubt, disclose.

2. Get a Pre-Sale Home Inspection

Some sellers opt for a pre-listing home inspection to uncover potential issues before putting the property on the market. This not only helps you stay ahead of any problems but also strengthens buyer confidence.

3. Work with a Real Estate Agent

An experienced real estate agent can guide you through the disclosure process and ensure you comply with all legal requirements. They can also help you phrase disclosures in a way that is transparent but not overly alarming to buyers.

4. Keep Records of Repairs and Upgrades

Maintaining documentation of repairs, inspections, warranties, and renovations can be useful when disclosing information. It shows buyers that you’ve taken proper care of the home.

Can Buyers Back Out Due to Disclosures?

Yes, if buyers discover a disclosed issue that they’re not comfortable with, they can walk away from the deal. Some states even allow buyers to back out without penalties if they find something concerning in the disclosure statement.

However, honesty is always the best policy. A buyer who backs out due to a disclosed issue is better than one who takes you to court after discovering something you hid.

Final Thoughts

Selling a home comes with its fair share of responsibilities, and being upfront about potential issues is one of the biggest. Transparency isn’t just a legal obligation—it’s also the ethical thing to do.

By providing full disclosures, you’re ensuring a smoother sale and avoiding future headaches. Plus, buyers will appreciate your honesty, which can help build trust and facilitate the transaction.

So, before listing your home, take time to understand your legal obligations. It’s better to disclose too much than too little—because when it comes to real estate, what you don’t say can come back to haunt you.