5 Ways to Avoid a Disclosure Catastrophe After Closing

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Ways to Avoid a Seller Disclosure Mishap

Imagine you’ve gotten the keys to your new house and you’ve moved in. You’re on a homebuyer’s high — until you discover a leaking roof or a snake infestation (true story). What do you do?

Here are some ways to avoid a costly post-closing catastrophe.

1. Look at the listing language

Some properties are listed for sale “as is,” but you should clarify if that means the seller is absolutely unwilling to address major safety issues that might come up in an inspection that would make it difficult for them to sell the house to any buyer, says Liane Jameson, a real estate broker in St. Petersburg, Florida. If a seller either can’t afford or doesn’t want to fork out any money for repairs, be prepared to move on, she says.

2. Know your lender’s requirements

Many mortgage lenders require that certain safety issues, such as high radon levels, a decayed roof or dangerous structural defects, be addressed before they’ll give you a loan.

3. Check out the property and seller online

If you find a house that’s been renovated recently, check your county’s online records to see if the proper building permits were pulled, says Kris Paolini, a real estate agent in Rockville, Maryland. You want to make sure that major renovations are up to code.

4. Get a home inspection

When you buy a house, even new construction, always hire your own inspector to do a thorough home inspection, which typically costs between $300 and $500, Paolini says. While an inspector might not catch everything, particularly if a seller is hiding something intentionally, you shouldn’t skip this step, because problems that pop up later could cost you big bucks.

5. Review the seller’s disclosures

Laws vary from state to state, but generally sellers are supposed to reveal any “latent defects” — problems with their property that a standard inspection can’t reasonably be expected to reveal, says Maryland real estate attorney Robert Moses. Homebuyers should always ask for repair or renovation documentation. Also, be wary of sellers who disclaim knowledge of the home’s condition; that’s a red flag, Moses says.

If you’ve moved into a home and find major problems that weren’t disclosed, you typically have two options: arbitration — mandatory or voluntary, depending on your state — or a lawsuit, Moses says. In arbitration, all parties sit down to discuss the issue and try to come to a resolution. If that doesn’t work, suing the seller, and possibly the seller’s agent, would be your next move. Litigation, however, isn’t a silver bullet; it can cost thousands of dollars and take months to resolve, Moses says.

The seller’s responsibility

If you’re selling your home, you have a legal and ethical responsibility to disclose any nonvisible defects before you put your home on the market. These might include:

  • Damaged roof, subfloor or walls.
  • Outdated electrical or plumbing systems.
  • Structural damage from flood, fire, wind, expansive soils or water.
  • Broken appliances.
  • Problems with major home systems (HVAC, furnace, water heater).
  • Structural or foundation cracks from settling.

Deborah Kearns is a staff writer at NerdWallet, a personal finance website. Email: dkearns@nerdwallet.com. Twitter: @debbie_kearns

This article was written by NerdWallet and was originally published by USA Today.