A seller employs a Property Disclosure Statement as legal insurance against claims made in connection with the sale of a property. It enables vendors to describe the background and current state of a property.

The purchaser can next think about the property disclosure statement and decide whether they wish to take care of any issues that are highlighted.

Table of Contents

• What exactly is a Property Disclosure Statement?
• What Is the Purpose of a Property Disclosure Statement?
• Property Disclosure Statements by States
• Is a Property Disclosure Statement Required?
• When Is a Property Disclosure Statement Required?
• The Property Disclosure Statement is completed by whom?
• What Information Must Be Disclosed in the Property Disclosure Statement?
• Writing a Property Disclosure Statement
• Areas of Concern
• Additional Details
• Signatures
• Property Disclosure Statement FAQs
• Property Disclosure Statement Sample

What exactly is a Property Disclosure Statement?

A Property Disclosure Statement (PDS), also known as a Seller's Disclosure or Seller's Property Information Statement (SPIS) in some regions, is a legal document used in real estate transactions. It is typically completed by the seller of a property and provided to potential buyers. The purpose of a Property Disclosure Statement is to disclose relevant information about the condition and history of the property. Here are key aspects of a Property Disclosure Statement:

Disclosure of Property Information: The PDS typically includes details about the property's physical condition, including information about the structure, systems (such as plumbing and electrical), appliances, and any known issues or defects.

Repairs and Renovations: Sellers are often required to disclose any repairs or renovations that have been made to the property. This may include information about the age and type of renovations, such as roof repairs or basement finishing.

Environmental Hazards: Sellers may be required to disclose information about known environmental hazards on or near the property, such as the presence of asbestos, lead-based paint, or underground storage tanks.

Legal Issues: Any legal issues related to the property, such as boundary disputes, zoning violations, or pending lawsuits, should be disclosed in the PDS.

History of Issues: Sellers are expected to provide information about any past issues or incidents that may have affected the property, such as water damage, flooding, or pest infestations.

Material Defects: Material defects, which are significant issues that could affect the property's value or safety, should be disclosed. This might include issues like a faulty foundation or a leaking roof.

Completing the PDS: Sellers are usually required to complete the PDS to the best of their knowledge. They should be honest and thorough in their responses, and they may be held legally responsible for any false or incomplete information.

Buyer's Due Diligence: Buyers rely on the information provided in the PDS to make informed decisions about whether to proceed with the purchase. They may use this information to conduct inspections or further investigations into the property's condition.

Legal Implications: Failing to disclose known issues or providing false information in a Property Disclosure Statement can lead to legal consequences for the seller. Buyers may have legal recourse if they discover undisclosed issues after the purchase.

It's important to note that the specific requirements and regulations regarding Property Disclosure Statements can vary by jurisdiction. Real estate laws and practices differ from one location to another, so both buyers and sellers should be aware of the local requirements and consult with real estate professionals or legal experts to ensure compliance.

What Is the Purpose of a Property Disclosure Statement?

The purpose of a Property Disclosure Statement (PDS) in a real estate transaction is to provide transparency and information to potential buyers about the condition and history of the property they are considering purchasing. Here are the primary purposes of a Property Disclosure Statement:

1. Transparency: The PDS serves as a tool for sellers to openly disclose known information about the property. This transparency helps build trust between buyers and sellers by providing a comprehensive view of the property's condition.

2. Informed Decision-Making: Buyers rely on the information provided in the PDS to make informed decisions about whether to proceed with the purchase of the property. It allows them to assess the property's condition and history before finalizing the transaction.

3. Risk Reduction: By disclosing material defects, known issues, or potential hazards, sellers can reduce the risk of future disputes or legal actions related to undisclosed problems with the property. Buyers are less likely to encounter unexpected issues after the sale.

4. Legal Requirement: In many jurisdictions, property sellers are legally obligated to provide a Property Disclosure Statement as part of the real estate transaction process. Failure to provide accurate and complete information can have legal consequences for sellers.

5. Due Diligence: Property buyers often use the information in the PDS as a starting point for their due diligence process. It may prompt them to conduct inspections, seek professional advice, or request further details about specific issues mentioned in the statement.

6. Negotiation: Information disclosed in the PDS can influence negotiations between buyers and sellers. If significant issues are revealed, buyers may request repairs, credits, or price adjustments as part of the negotiation process.

7. Protection for Both Parties: While the PDS primarily benefits buyers by providing valuable information, it also offers some level of protection for sellers. It allows sellers to document what they know about the property, reducing the likelihood of future claims that they withheld information.

8. Risk Assessment: Buyers can use the information in the PDS to assess whether they are willing to accept certain property conditions or whether additional inspections or evaluations are needed.

9. Disclosure of Environmental Hazards: In regions prone to environmental hazards, the PDS may include information about potential risks, such as the presence of asbestos, lead-based paint, radon, or other hazards.

10. Compliance with Local Laws: Property Disclosure Statements help ensure that real estate transactions comply with local laws and regulations, which vary by jurisdiction.

The primary purpose of a Property Disclosure Statement is to provide transparency, protect the interests of both buyers and sellers and facilitate informed decision-making in real estate transactions. It serves as a crucial document in the due diligence process and helps minimize the potential for misunderstandings or disputes regarding the property's condition.

Property Disclosure Statements by States

Property Disclosure Statements, also known as Seller's Disclosure or Property Condition Disclosure, vary by state in the United States. Each state has its own laws and regulations governing the content and requirements of these statements. Here's a general overview of how Property Disclosure Statements may differ by state:

1. Content: The specific information that sellers are required to disclose can vary widely. Some states have comprehensive disclosure forms that cover a wide range of property-related issues, while others focus on specific areas like environmental hazards, structural defects, or zoning.

2. Mandatory or Voluntary: In some states, Property Disclosure Statements are mandatory and must be provided by the seller to the buyer as part of the real estate transaction. In other states, they may be voluntary, meaning that sellers have the option to provide them.

3. Disclosure of Environmental Hazards: States with known environmental hazards, such as radon, lead-based paint, or asbestos, may require specific disclosures related to these hazards. The format and content of these disclosures can vary.

4. Local Variations: Some cities or local jurisdictions within a state may have additional disclosure requirements that go beyond state-level regulations. Sellers and real estate professionals should be aware of any local variations.

5. Exemptions: Certain states or circumstances may provide exemptions from certain disclosure requirements. For example, if a property is being sold "as is" or through certain types of sales like foreclosures or estate sales, some disclosure requirements may not apply.

6. Legal Consequences: The legal consequences for failing to provide accurate and complete disclosures can vary. In some states, sellers may be held liable for undisclosed defects or issues discovered after the sale, while in others, there may be limited or no legal repercussions.

To obtain specific information about Property Disclosure Statements in a particular state, it's essential to consult the state's real estate regulatory authority, often the state's real estate commission or Department of Commerce. Additionally, local real estate associations and professionals can provide guidance on state-specific disclosure requirements and practices.

Keep in mind that real estate laws and regulations can change over time, so it's crucial for both buyers and sellers to stay informed and work with experienced real estate professionals who are knowledgeable about the current requirements in their state or locality.

Is a Property Disclosure Statement Required?

Whether a Property Disclosure Statement is required in a real estate transaction depends on several factors, including the state and local laws, the type of property being sold, and whether the property is being sold "as is." Here are some key considerations:

1. State and Local Laws: The requirements for Property Disclosure Statements vary by state and even by local jurisdiction. Some states have mandatory disclosure laws that require sellers to provide a Property Disclosure Statement to buyers, while others may not have such requirements.

2. Type of Property: The type of property being sold can also affect whether a Property Disclosure Statement is required. For example, residential properties often have more stringent disclosure requirements compared to commercial or vacant land properties.

3. "As Is" Sales: In some cases, sellers may choose to sell a property "as is," meaning they are not willing to make any repairs or provide warranties. In such cases, the seller may not be required to provide a Property Disclosure Statement, but the buyer should still conduct due diligence and inspections.

4. Seller's Knowledge: If the seller has no knowledge of any material defects or issues with the property, they may not be required to provide a Property Disclosure Statement. However, deliberately concealing information or providing false information can have legal consequences.

5. Buyer's Request: Even in states where Property Disclosure Statements are not mandatory, buyers may have the option to request one as part of the negotiation process. Sellers may choose to provide a statement voluntarily to address any potential concerns.

It's essential for both buyers and sellers to familiarize themselves with the specific laws and regulations in their state and local area regarding Property Disclosure Statements. Real estate professionals, including real estate agents and attorneys, can provide guidance on compliance with disclosure requirements and help navigate the process.

When Is a Property Disclosure Statement Required?

A Property Disclosure Statement (PDS) is typically required in a real estate transaction in the United States under certain circumstances, but the specific requirements can vary by state and locality. Here are common situations when a Property Disclosure Statement may be required:

1. Residential Real Estate Sales: In many states, sellers of residential properties are legally obligated to provide a PDS to the buyer. Residential properties include single-family homes, condominiums, townhouses, and multi-unit buildings with fewer than a certain number of units (e.g., four units or fewer).

2. Newly Built Homes: Even in states where existing homeowners may be required to provide a PDS, newly constructed homes are often exempt from this requirement. However, builders of new homes may provide a separate warranty or disclosure document.

3. Transfer of Ownership: Property Disclosure Statements are typically required when there is a transfer of ownership, whether through a sale, lease with an option to purchase, or other means. The goal is to ensure that buyers receive important information about the property's condition.

4. Material Defects: In states with disclosure laws, sellers are generally required to disclose material defects or issues with the property that they are aware of. Material defects are significant issues that could affect the property's value or safety.

5. "As Is" Sales: Even when disclosure laws exist, sellers who are selling a property "as is" may not be required to complete a PDS. However, they should still provide information honestly if asked by the buyer.

6. Buyer's Request: In some cases, a buyer may request a PDS from the seller as part of the negotiation process, even if it is not required by state law. Sellers may choose to provide one voluntarily to address potential concerns.

7. Local Variations: Local jurisdictions may have additional requirements or variations in disclosure laws, so it's essential for both buyers and sellers to consult local regulations.

It's important to note that the specific requirements for Property Disclosure Statements can change over time and can vary significantly from one state to another. Real estate professionals, including real estate agents and attorneys, can provide guidance on the specific disclosure requirements in a given location and help ensure compliance with the law. Buyers should review the PDS carefully and, if necessary, seek further inspections or information about disclosed issues.

The Property Disclosure Statement is completed by whom?

The property disclosure statement must be completely filled out by the property seller.

Remember that California requires property sellers to complete the transfer disclosure statement in writing and that real estate brokers are not permitted to provide legal advice regarding the document.

What Information Must Be Disclosed in the Property Disclosure Statement?

A Property Disclosure Statement (PDS), also known as a Seller's Disclosure or Property Condition Disclosure, typically requires sellers to disclose a range of information about the property they are selling. The specific disclosures may vary by state and locality, but they generally cover the following areas:

1. Structural Issues: Sellers should disclose any known structural problems with the property, such as foundation issues, roof leaks, or problems with the walls or floors.

2. Environmental Hazards: Disclosures related to environmental hazards are crucial. Sellers should disclose information about lead-based paint, asbestos, radon gas, mold, or other environmental concerns if they are aware of them.

3. Plumbing and Electrical Systems: Any known issues with plumbing or electrical systems should be disclosed. This includes problems with pipes, fixtures, wiring, or outlets.

4. Mechanical Systems: Sellers should disclose issues with heating, ventilation, air conditioning (HVAC), and other mechanical systems. This may include problems with the furnace, air conditioner, or water heater.

5. Roof and Exterior: The condition of the roof and exterior components like siding, windows, and doors should be disclosed. Sellers should mention any leaks or damage.

6. Pests and Infestations: Disclosures regarding pests, such as termites or other infestations, are essential. Sellers should disclose if they have had pest control treatments or repairs related to pests.

7. Appliances and Fixtures: Information about the condition of appliances and fixtures included with the property should be provided. Sellers should mention if any appliances are not in working order.

8. Previous Repairs or Renovations: Sellers should disclose any significant repairs or renovations that have been made to the property, including when they occurred and whether proper permits were obtained.

9. Water and Sewer Issues: If there are known problems with water supply or sewage systems, these should be disclosed.

10. Property Boundaries: Any disputes or issues related to property boundaries, easements, or encroachments should be disclosed.

11. Legal Issues: Sellers should disclose any legal issues related to the property, such as ongoing lawsuits, property tax disputes, or violations of zoning laws.

12. Flood Zone or Natural Hazards: If the property is in a flood zone or is prone to natural hazards like earthquakes or wildfires, this information should be disclosed.

13. Homeowners' Association (HOA): If the property is part of an HOA, sellers should provide information about HOA fees, rules, and any known disputes or issues within the association.

14. Property History: Sellers should disclose any significant events in the property's history, such as previous fires or flooding.

15. Material Facts: In general, sellers should disclose any other material facts or issues that could affect the value or safety of the property. This includes information about neighborhood nuisances or ongoing construction projects nearby.

Writing a Property Disclosure Statement

Writing a Property Disclosure Statement (PDS) is a crucial part of selling real estate, as it provides important information to potential buyers about the property's condition. Here are steps to help you write a comprehensive PDS:

1. Use a Standard Form: Many states provide standard PDS forms that sellers can use. Start by obtaining the appropriate form from your state's real estate commission or department of commerce.

2. Property Details: Begin by providing basic details about the property, such as the address, legal description, and the names of all owners selling the property.

3. Disclosure Items: The form will typically have sections or checkboxes for different disclosure items. Carefully review each section and provide honest and accurate information about the property's condition.

4. Check "Yes" or "No": For each disclosure item, check either "Yes" or "No" to indicate whether the issue is present or not. If you check "Yes," provide additional details and explanations.

5. Attach Additional Sheets: Some disclosure forms may not have enough space for detailed explanations. Attach additional sheets if necessary to provide a complete description of any issues.

6. Be Thorough: Disclose all known issues, even if they have been repaired. This includes past problems that have been fixed, as buyers may want to know the property's history.

7. Environmental Hazards: Pay special attention to disclosure items related to environmental hazards such as lead-based paint, asbestos, radon, and mold. Follow any specific requirements for these disclosures.

8. Material Facts: Include any material facts or issues that could affect the property's value or safety, even if they are not explicitly mentioned in the form.

9. Legal Compliance: Ensure that your PDS complies with state and local laws. Some states have specific language or formatting requirements.

10. Sign and Date: Sign and date the PDS to certify that the information provided is accurate to the best of your knowledge.

11. Keep a Copy: Make a copy of the completed PDS for your records.

12. Review with Your Real Estate Agent: If you are working with a real estate agent, review the completed PDS with them to ensure that it is accurate and complete.

13. Provide to Buyers: Provide a copy of the PDS to potential buyers as part of the disclosure process. It should be given to buyers before they make an offer or as early as possible in the sales process.

14. Seek Legal Advice: If you have questions or concerns about what to disclose, consider seeking legal advice from an attorney experienced in real estate law.

Remember that honesty and transparency are key when completing a Property Disclosure Statement. Failing to disclose known issues can lead to legal consequences and potentially derail the sale of the property. Buyers rely on this information to make informed decisions about their purchases.

Areas of Concern

These parts of the property condition disclosure statement focus on the potential issues a property may have had.

These may incorporate:

• Bug infestations and other problems

• Emissions of carbon monoxide

• Containing dangerous or restricted materials

• breaches of zoning

• Standing water and exterior drainage

• Flooding

• Restrictions on property

• Murder/suicides

• A history of crime or use of illicit drugs

• Component flaws

Additional Details

Sellers are typically required to indicate if they have made improvements to the property while it has been their ownership interest in property condition disclosure statements.

In this area, sellers can also include any further disclosures and details about a property's mineral rights.

Signatures

The property condition disclosure statements are then signed by the sellers and interested buyers to confirm receipt.

Property Disclosure Statement FAQs

What Is a Property Disclosure Statement (PDS)?

A Property Disclosure Statement is a document completed by a seller in a real estate transaction. It provides information about the condition of the property, including any known defects, issues, or history that could affect its value or safety. It aims to offer transparency to potential buyers.

Is a Property Disclosure Statement Required in Every State?

No, the requirement for a Property Disclosure Statement varies by state and locality. Some states mandate the use of PDS forms, while others do not have specific requirements. It's essential to consult local real estate regulations to determine if a PDS is necessary.

What Should a Seller Include in a Property Disclosure Statement?

Sellers should include information about structural issues, environmental hazards, plumbing and electrical systems, mechanical systems, past repairs or renovations, roof and exterior conditions, and more. The goal is to disclose material facts that may impact the property's value or safety.

Can Sellers Choose Not to Disclose Certain Issues?

While sellers should disclose known issues honestly, there may be cases where they choose not to disclose certain issues. However, deliberately concealing information can have legal consequences and may lead to disputes or legal action.

When Should a Property Disclosure Statement Be Provided to Buyers?

Property Disclosure Statements should be provided to potential buyers before they make an offer on the property or as early as possible in the sales process. This allows buyers to consider the information when deciding whether to proceed with the purchase.

Property Disclosure Statement Sample