In the post-Covid real estate market, sellers have had leverage over buyers. Many buyers have written non-contingent offers based on seller disclosures. But what will happen a few months down the line if the buyer discovers an issue that was not disclosed? Even if the buyer has a home inspection and a due diligence contingency, a seller can still be liable for pre-existing issues that were not disclosed.
So how do sellers stay out of trouble? Disclose. Disclose. Disclose. Those words were drilled into me by the broker who trained me. Below is a list of common issues I have encountered when listing properties.
Let’s say the roof leaked or there was an ice dam. The owner replaced the entire roof so there is no longer an issue. Disclose? Yes! When the home inspector finds signs of “previous leakage” or “water damage,” the buyer is going to expect to see a disclosure regarding the roof. This happened in a transaction I was involved with where the buyer canceled because he lost trust in the seller.
Heating & Cooling
Similar to the roof, sometimes a furnace will leak and cause corrosion on surrounding pipes. Even if the furnace was replaced, disclose the prior leak.
Second homeowners may leave their homes vacant for months at a time in locations that were formerly fields, ranches or wilderness. I’ve walked into luxury homes that were practically taken over by mice, homes where raccoons built nests in the attic, and homes where other critters moved in. Of course the homeowners eradicated these trespassers before listing their homes for sale. However, they must report the presence of such pests in the seller disclosures.
Mold or Radon
These two environmental issues are common in Park City homes and both are very simple and easy to mitigate. Sellers must disclose mold or radon even if they have been resolved.
HOA Special Assessments
This year, just days before a closing, the HOA of one of my listings passed an assessment of a few thousand dollars that my seller had to disclose and pay prior to settlement. This was unfortunate timing, but it happens. Sellers can not hide these issues as the title company will check with the HOA prior to closing and will not transfer the property unless and until these assessments are paid. If you are selling a property and there is an HOA meeting during the escrow period, be mindful that you could be financially liable for an assessment.
Short Term Rentals
VRBO and Airbnb both have policies that will not allow owners to transfer rentals. Rentals must be canceled and then re-booked with the buyer. If the property is managed by a professional property manager, this process is much easier. Either way, the seller must disclose any rentals that are booked after closing.
Some solar panels are leased and the lease must be assumed by the buyer. I had a transaction fall apart because the buyer did not want to assume a 30-year lease and wanted the seller to pay off the panels at settlement. This can turn into a big mess if it is not disclosed upfront.
These are just a few examples of issues I have personally encountered in transactions. This list is by no means exhaustive. The best advice I can give anyone selling their home is to disclose, disclose, disclose. Even if you have repaired the issue. Even if no one will be able to tell there was an issue. Protect yourself and disclose.