Should You Disclose Everything When Selling a House?
Updated: Jun 1, 2020
Disclosures vary from state to state, but most relate to material defects and physical things which are wrong with the home (latent/material defect disclosure). However, imagine you’re selling an awesome property that is a buyers dream home, except one thing – someone has died in it. Recent or not, you need to be aware of your responsibilities to disclose such incident.
Disclosure Factors to Consider
The purpose of disclosure laws is to protect prospective buyers, by ensuring they have sufficient information about a property to make an informed decision. But, in the same way a flood-prone basement may be considered a material defect, a past death in a property can be considered a psychological or emotional defect. There are some buyers who will be concerned or even have superstitions about purchasing a home in which someone has died. Your disclosure responsibilities about deaths in a property you are selling or renting are dependent on your state.
A property is considered "stigmatized" when a suicide, murder, criminal activities or other events have occurred there which can negatively influence perceptions about the property. The concept of a stigmatized property can also refer to the street or an area of the city where the property is located. Like with a natural death, this can be considered a psychological or emotional defect.
Latent Defect Disclosure
A seller of real estate has a duty to disclose to his purchaser a known latent defect, and his failure to disclose amounts to concealment, making him vulnerable to a suit based upon fraud. A “latent defect” is not observable, or discoverable through reasonable inspection. To prevail on a claim of fraudulent concealment, a property buyer must show that a seller actually knew of a material fact that was not disclosed.
Story Time - It happened to me
When I purchased my first home in 2000, it was a beautiful five bedroom house on a
double corner lot and three car garage. It had the charm, space and style I absolutely
loved. I had the inspection done - all cleared, asked the owners about the property -
no major problems, talked with a neighbor about the area - peaceful and quiet.
Prefect! I purchased the house! Moved in and got settled...had the housewarming and
few cookouts...everything was going great....no problems. For the first couple of
months the weather was dry and hot that year (relevance will be revealed soon).
Four months later, we had a huge rain storm and the basement flooded. I noticed the
toilet in basement had debris coming out of (leaves and mud). I was horrified to say the
least. I called the plumber and they said the drain trap was busted, the sump pump
was in the wrong place (should have been in the lower part of the basement which was
not in the wine cellar), and I needed to have it replaced and repaired. This cost was
about $2200. Of course I was devastated. I contacted my real estate agent and
attorney to see if there was anything that could be done....NOTHING about flooding was
Well, a couple of weeks later and I tracked down the previous owners (who moved to
Arizona) and said they "forgot to tell me" about the leak (they had removed/repaired
any signs of a flooding basement prior to selling the house). I told my attorney and he
said this should have been disclosed. End result? I was reimbursed my money by the
former home owners (or they would have been sued for a lot more).
Its best for sellers to just be upfront about everything. If someone specifically asks, avoid being misleading because you and your Realtor® may be required by law to tell the truth to any potential buyer and failure to do so could cost you gravely, later.
If this has happened to you, comment below.