Table of Contents

• What is a Property Disclosure Statement?
• Why is a Property Disclosure Statement Important?
• Key Components of a Property Disclosure Statement
• How to Complete a Property Disclosure Statement
• Common Challenges and How to Address Them
• Who Needs a Property Disclosure Statement?
• When Should a Property Disclosure Statement Be Used?
• Advantages of a Property Disclosure Statement
• FAQs About Property Disclosure Statements

What is a Property Disclosure Statement?

A Property Disclosure Statement is a written document provided by a seller that outlines any known issues or defects with the property. The disclosure form helps buyers understand the property's condition before finalizing a purchase.

Common disclosures include:

• Structural problems (roof leaks, foundation cracks, plumbing issues).
• Past water damage or flooding history.
• Presence of hazardous materials (lead paint, asbestos, mold).
• History of pest infestations.
• Zoning violations or property boundary disputes.

State laws vary regarding what sellers must disclose, so it's important to use a legally compliant form based on local real estate regulations.

Why is a Property Disclosure Statement Important?

Protects Buyers from Unseen Defects

Gives buyers critical information about the property's condition, allowing them to make informed decisions.

Prevents Legal Disputes

By providing full disclosure, sellers reduce the risk of lawsuits related to hidden property defects.

Ensures Transparency in Real Estate Transactions

A legally required disclosure ensures that buyers and sellers engage in fair transactions.

Required by Law in Many States

Many states mandate that sellers provide a property disclosure statement before finalizing a sale.

Gives Buyers a Negotiation Advantage

If a disclosure reveals defects, buyers can request repairs or negotiate the purchase price.

Key Components of a Property Disclosure Statement

Seller and Property Information

• Full name of the seller.
• Address of the property.
• Year the home was built.

Structural and Mechanical Issues

• Roof leaks, cracks, or past repairs.
• Plumbing or electrical system problems.
• HVAC system functionality.

Water Damage and Environmental Hazards

• History of flooding, leaks, or mold.
• Lead-based paint, radon gas, or asbestos presence.

Pest and Infestation History

• Termite damage, rodent infestations, or insect issues.

Legal or Zoning Issues

• Property boundary disputes or easements.
• Unresolved zoning violations.

HOA and Neighborhood Regulations

• Homeowners Association (HOA) rules, fees, and restrictions.

Seller’s Certification and Signatures

• A statement confirming that the seller has disclosed all known issues honestly.

How to Complete a Property Disclosure Statement

Step 1: Gather Property History and Repair Records

• Review past repairs, renovations, and inspections.
• Check for permits on any major renovations.

Step 2: Fill Out the Disclosure Form Honestly

• Be truthful about known defects and repairs.
• If unsure, mark “unknown” instead of making assumptions.

Step 3: Include Any Required Additional Disclosures

• Some states require separate lead-based paint, flood zone, or radon gas disclosures.

Step 4: Review with a Real Estate Agent or Attorney

• Ensure the disclosure complies with state laws and local regulations.

Step 5: Provide the Disclosure to the Buyer Before Closing

• Give the buyer ample time to review and negotiate based on the disclosed information.

Common Challenges and How to Address Them

Seller is Unaware of Certain Property Issues

• Solution: If unsure, disclose only what you know and allow the buyer to conduct inspections.

Buyer Disputes the Accuracy of the Disclosure

• Solution: Keep receipts and documentation of past repairs to verify claims.

Seller Fails to Disclose a Major Issue

• Solution: If a defect is discovered after the sale, the buyer may have legal grounds for compensation.

State-Specific Disclosure Requirements

• Solution: Use a state-specific disclosure form to ensure compliance.

Who Needs a Property Disclosure Statement?

• Home sellers listing their property for sale.
• Real estate agents facilitating property transactions.
• Buyers who want transparency about a property’s condition.

When Should a Property Disclosure Statement Be Used?

• Before listing a home for sale.
• Before signing a purchase contract.
• When selling a home that has known defects or past repairs.

Advantages of a Property Disclosure Statement

• Protects sellers from future legal disputes.
• Ensures buyers are informed about potential property risks.
• Helps buyers negotiate repairs or price adjustments.
• Improves trust and transparency in real estate transactions.

FAQs About Property Disclosure Statements

Is a Property Disclosure Statement legally required?

Most states require sellers to disclose known defects, but disclosure laws vary by state.

What happens if a seller fails to disclose a defect?

Buyers may have legal grounds to sue if a defect was deliberately hidden.

Can a buyer back out after reviewing a disclosure statement?

Yes, if significant issues are disclosed, buyers may negotiate repairs or walk away.

Does a seller need to disclose issues they’ve already fixed?

Yes, sellers should disclose past issues and note that they have been repaired.

A Property Disclosure Statement ensures that real estate transactions remain transparent, legally compliant, and fair for both buyers and sellers. Download our free disclosure template today to simplify your home-selling process! 

Property Disclosure Statement Sample