Chicago Real Estate Lawyers

Understanding Disclosure Statements

They can take many forms. Disclosure statements provide a great deal of useful information to the buyer about the property they are looking to buy and its past history. The amount of information contained in the disclosure statement depends on the seller. The information can include anything from a statement acknowledging that the roof leaks to news about a construction project nearby. In part, these statements are designed to protect the seller from legal action in the future if the buyer decides to take them to court over false presentation of the estate’s condition. The laws regarding disclosure can vary between states. The documents that may need to be signed as part of the disclosure agreement can include natural hazards disclosure statements, state transfer statements and Megan’s Law disclosures.

Many pre-written formats exist for disclosure documents where the seller needs to answer basic questions about a piece of real estate and their personal experience with it. The sellers needs to include full documentation regarding any substantial defect that can have a negative effect on the value of the property. The liabilities for failing to disclose a defect can be applied up to ten years after a property transaction has taken place. That is why it’s a good idea to be as thorough as possible while filling out the disclosure statement, since lack of disclosure can result in an expensive lawsuit.

The content of the statement can include information about previous renovations or upgrades that were performed by the seller, and whether the work was done after getting the required permits. Buyers can cross check the disclosure statement with city building permits and zoning reports to confirm their veracity. Renovations not done according to code leave the door open for fire or health hazards. Disclosure statements can also be about the existence of pets, termites, bad neighbors, property line disputes or malfunctioning appliances and utilities. The seller can also mention issues regarding bankruptcy, property lease etc.

There is a difference between a disclosure statement and an inspection statement. A disclosure is provided to the buyer by the seller mentioning their knowledge of the property. On the other hand, an inspection is carried out by independent third parties after checking for property defects not mentioned by the seller. A full property inspection should always be performed before buying a property, no matter how thorough you think the disclosure statement has been. Oftentimes, a seller can ask a professional to inspect the property and sign a note confirming its appearance and state of functioning before putting the property up for sale. This helps provide legitimacy to the seller’s claims.