Greetings! This week I’d like to spend a little time talking about an important and often confusing real estate term: disclosures. What are disclosures in real estate and what do you need to know about them as either a buyer or a seller? Read on!
What is a “disclosure” in real estate?
If you are a seller and you are aware of a major defect in the property you are selling or any problem that might affect the property value, you are obligated by law to tell potential buyers about this defect. As a buyer, you have a right to learn about all disclosures in order to inform your decision to purchase and at what price.
Most disclosures have to do with the need for repairs or structural problems. But, disclosures can also be anything outside the home that might affect the property value or an owner’s reasonable enjoyment of their home. For instance, if a seller knew that the land adjacent to their home had just been purchased by a nearby airport to create a new runway, typically, the seller would be obligated to tell a potential buyers about this. That’s because the noise pollution from the new runway could damage the property value.
Here are a few other examples of items that a seller would be legally obligated to disclose to a potential buyer:
- A malfunctioning refrigerator
- A history of termite problems
- Construction of a deck without proper city permits
- An ongoing dispute with a neighbor over the property line
This is nowhere near a comprehensive list of potential disclosures but hopefully it gives you an idea of what kind of things you should be thinking about as both a buyer and a seller.
Knowing the laws about disclosures
Laws about disclosures vary by state. In some places, disclosures must be given to a potential buyer in written form; in other states this is not required. Some states require that sellers only disclose problems they are aware of; sellers don’t need to search for problems. But other states require that sellers actively look for certain problems, like termite damage. It is important that sellers abide by the disclosure laws of their state and that buyers are aware of their disclosure rights in their state.
In Illinois, residential real estate disclosures are dictated by the Residential Real Property Act (765 ILCS 77) that went into effect in 1994. Feel free to take a read – but it’s a hefty document with lots of legal-speak. Fortunately the attorneys at Chang Legal focus on Illinois real estate law, including the laws surrounding disclosures. We make sure all of the sellers we represent disclose everything they are legally obligated to disclose, in order to ensure a smooth selling process. Furthermore, the buyers we represent can be assured that they have received the disclosures to which they are legally entitled.
Federally Mandated Disclosures
There is one federally mandated disclosure: if the seller’s house was built before 1978, the seller must disclose the existence of any lead-based paint in the home and must abide by the other rules found in the Lead-Based Paint Hazard Reduction Act of 1992.
Sellers Beware!
If you clicked on the link to the Illinois Residential Real Property Act above, you may have noticed that it includes a list of disclosure items that sellers must check yes or no on. It’s that simple, right? Not quite. We strongly urge all sellers to get a legal consultation before turning over any disclosure form. In some cases, an attorney may discover that the seller is exempt from making disclosures. In other cases, there may be items not on the list that the seller is aware of but isn’t sure whether or not they need to disclose. An attorney can help the seller make this determination.
Problems with disclosures after the sale
There is another time when you might need an attorney as a seller or buyer: after the sale has finished. If a new home owner discovers a defect that they think affects the value of the property or requires repairs, and the previous owner did not disclose this issue, the new owner may be able to sue the previous owner to recoup costs.But there can be a fine line between something that should have legally been included with the disclosures and something that wasn’t necessary to disclose. If you are a previous owner being sued by a new owner over disclosures, you are going to want a legal team experienced in residential real estate. That’s where Chang Legal comes in.
Whether you are a buyer or a seller, properly handling disclosures can mean the difference between a smooth transition of ownership and a sale that falls through. You can get all the legal real estate support you need, for disclosures and all the other legal issues surrounding property sales and purchases, at Chang Legal. If you are buying or selling property, or even thinking about it, give us a call at 847-907-4971 or email us today at ContactUs@changlegal.com.