Sellers Disclosure

Whether you have owned your home for decades or just a few years, you know its flaws, its best features, and its quirks. As a seller you may feel uncomfortable disclosing problems that could deter potential buyers, but if a flaw is found after closing and the buyers believe you were aware of the problem, you could face a serious lawsuit and wind up paying for expensive repairs and damages.


What must be disclosed?

Iowa Code 558A.4 requires the seller to provide the buyer with disclosure statement regarding the “condition and important characteristics of the property and structures located on the property, including significant defects in the structural integrity of the structure…” That is, buyers have a right to information that could be deemed a “material adverse fact.” Ask yourself if you would want to have the information if you were the buyer. If the answer is yes, then disclose.

There are some defects that should always be disclosed:

  • Plumbing and sewage issues;
  • Water leakage of any type, including in basements;
  • Termites or other insect infestations;
  • Roof defects;
  • Heating and air conditioning system issues;
  • Property drainage problems;
  • Foundation instabilities or cracks;
  • Problems with title to the property; and
  • Issues with neighbors that aren’t obvious.

A form Residential Property Seller Disclosure Statement is available online.


Federal disclosure requirements

Federal law requires sellers to disclose all known lead based paint and hazards in the home, which might include lead pipes or repairs to pipes. Pursuant to EPA and HUD rules, the seller also needs to attach a lead-based paint disclosure statement to the residential disclosure statement, plus, if the house was built before 1978, the seller must provide the buyer with a pamphlet entitled “Protect Your Family From Lead in Your Home”. The pamphlet and a lead compliance toolkit is available online.


What if the seller is unaware of a defect or condition?

Generally, you only need to disclose information within your personal knowledge. However, if the statement contains errors or omissions, the seller can be held liable. Sellers must make reasonable efforts to obtain the information necessary to accurately complete the statement and make updates as information becomes available.


What happens if the seller fails to disclose?

With the increased trend toward consumer protection, a seller who doesn’t disclose known facts can be sued by the buyer after the defect is discovered. Failure to provide a seller disclosure statement does not make the transfer invalid, but the seller could be responsible for the costs of repairs and damages caused by the undisclosed defect. A seller may even be ordered to take the property back and held responsible for the buyer’s attorneys fees.

If you have lived in your house for a long time, it could be easy to forget a problem that was repaired years ago and has not reoccurred since. Even past conditions must be disclosed. You may want to create a binder with receipts and insurance claim information to show buyers what work has been done on your home. Openness about your home’s condition is the best way to avoid lawsuits.