- The Washington Times - Wednesday, July 30, 2003

You’re ready to sell your house. You’ve got the yard pruned, the kitchen painted, the roof fixed, and you’ve even got a buyer who is interested.

But there’s a catch: Your newly landscaped yard is concealing a couple of sinkholes, and the paint in your kitchen covers smoke marks from a small fire you had two years ago.

So what do you tell the buyer?

Whether you tell everything or nothing depends on a number of factors, including the nature of the problem, the location of the house, the nature of the local real estate market and the state of your ethics.

If you tell everything, you’ll have to fill out a disclosure statement that asks you to note repairs and persistent problems and make judgments about various components in your home.

If you are in Maryland or Virginia, you also have the option to sell the property “as is.” D.C. residents are required to disclose.

Disclose or disclaim? That is the question.

“I’d say, always disclose,” says Donald Weaver, managing broker with Weichert Realtors in Annandale. “The buyer should know what they’re getting.”

But the road to disclosure might not be as straight and narrow as it seems.

Take those sinkholes in the yard. That’s something you should reveal to the buyer, Realtors say, because the persistence of the holes could indicate an underlying structural problem. Of course, if you had chosen not to fill them in, you wouldn’t have to disclose them; their presence would have been obvious.

Things are a bit less clear about those smoke stains from a long-ago fire, though. This one could go either way. The long-ago fire is not a continuous issue; its effects are not still being felt, so some people might feel it is not really necessary to divulge that it happened at all.

This is where the relatively clear-cut nature of disclosure can get a bit murky. What exactly merits disclosure? Should you disclose low water pressure? A drippy faucet? Ghosts?

It depends.

“There can be some fine lines,” Mr. Weaver says. “If you had a drip that was fixed in 15 minutes, I don’t think you’d have to disclose that. But if it dripped through three floors of the house, then of course you should.”

Hidden problems — such as the presence of old septic or oil tanks, noise or environmental pollution from a nearby factory or a home’s own history — can pose thorny disclosure questions.

Some people can be put off by the knowledge that a murder once occurred in the home. One New York couple actually sued for the purchase price of their suburban home because the previous owner had not revealed that the house was “haunted.”

Generally speaking, anything that could make a difference to the buyer’s decision to buy should be disclosed. In all cases, federal law bars unsolicited disclosure that a previous occupant had HIV or died of AIDS.

“The more information you can give to people to make an informed decision, the better,” Mr. Weaver says.

The problem is how quickly things get gray.

Residents in Maryland and Virginia basically have two choices. Virginia’s 1993 Residential Property Condition Disclosure Act mandates a seller to either disclose or disclaim to the purchaser before or at the presentation of the contract. You can provide the buyer with a checklist of sorts of house defects and repair history.

Maryland has a similar form, again based on the personal knowledge of the seller at the time of the statement.

Disclosure forms provided in all three jurisdictions detail the scope of the information needed, the seller’s knowledge of foundation and other structural problems, air conditioning and power systems, and smoke detectors.

For all jurisdictions, certain situations, such as homes in probate or foreclosure, do not have to meet the same disclosure requirements.

What can you expect from disclosure?

If you are a buyer who has received a disclosure form from the seller, you should be receiving the seller’s good faith estimate of the scope of a home’s problems, both hidden and obvious. Just don’t assume that will always be the case. Some Realtors report sellers showing homes who block structural and other defects with piles of toys and mountains of boxes.

“By law, the disclosure form is filled out by the seller — not the agent,” says Chris Koehler, sales associate with Coldwell Banker’s Georgetown office. “Everyone is supposed to follow the code, but not everyone discloses everything.”

Sellers might not always leave things out maliciously; they may have just lived with the problem so long that they have forgotten it.

Claims against sellers who did not disclose all problems or who minimized a problem they did reveal are not always that easy to prove, Mr. Koehler says. By the time effort and attorney’s fees are factored in, the buyer could end up spending more than he recovers.

“It can be difficult and expensive to chase people down,” he says. “It may be more cost effective to fix the problem rather than go to court.”

Disclaimer forms tend to be simpler than disclosure forms, at least at first glance. They certainly are shorter, usually consisting of a statement in which the seller abjures all responsibility for “condition of the property or any improvements thereon.” In Virginia, sellers can be held liable for a discrepancy on the disclosure statement for up to a year after settlement. The result: Most sellers opt for disclaimer.

“I’d say 99.9 percent of the people I deal with opt for disclaimer,” Mr. Weaver says. “Most people feel that they are not proficient enough to make specific statements about their house.”

It’s a kind of throwback to the old days of “caveat emptor” — buyer beware — where all responsibility rests with the buyer.

In the Washington area these days, however, the question for many buyers and sellers to disclose or disclaim tends to be moot. Thanks to the hot state of the area’s real estate market, many sellers can dispense with disclosure altogether.

“It’s a seller’s market,” Mr. Koehler says. “Buyers are pressured into literally buying things as they are.”

With four, five and even six contracts on a single property, sellers find they can easily strike a bargain that eliminates things such as disclosure or home inspection.

“It’s scary what people are willing to give up,” Mr. Weaver says. “I don’t like it, either as a lister or a seller.”

In the long run, disclosure can be more useful for buyers, who might not want to ask the hard questions involved when purchasing a new home. After all, most people want to move in, not walk away.

Regardless of whether your seller discloses or disclaims, most Realtors recommend getting an independent home inspection, anyway.

“It’s definitely worth the time to have a home inspection,” Mr. Weaver says. “You wouldn’t buy a used car for a large sum of money and not have a mechanic check it out.”

Even the best of outside home inspections are not always foolproof, though. An inspector can always miss a problem that is not all that easy to find.

At least, they say, a home inspection can help to substantiate and extend what is disclosed on the form.

At times like these, it can be tempting to strike the kind of deal that does away with home inspection, disclosure and anything else that might muddy the waters.

So it might be helpful to turn to a higher authority. Consider the ethic of reciprocity, a statement of ethical purpose that is found in nearly every religion. “Do unto others …” is perhaps the simplest way of looking at the issue.

Suppose you were the buyer. What would you want to know?

Bottom line? If you are the seller, it’s safest and most ethical to follow the letter — and the spirit — of the law. When in doubt, disclose.

Home buyer? Get a home inspection.

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