Disclosure Examples

Disclosure laws in general require sellers to say upfront whether their property has certain known issues that could impact the buyer’s health or safety. These laws vary by state but are meant to protect both the buyer and the seller. Disclosing any issues about major home components, systems, and conditions puts the buyer on notice—and prevents the seller from being held liable for future problems.

The following are some of the most common disclosures required.


Federal law—the Residential Lead-Based Paint Hazard Reduction Act passed in 1992—requires the disclosure of any lead-based paint or chipped paint in any housing built before 1978. Under the law, homebuyers also have a 10-day period to conduct a paint inspection or risk assessment for lead-based paint or related hazards.


The health hazards of asbestos are well-known in the workplace; the U.S. Occupational Safety and Health Administration sets standards for asbestos testing and disclosure in work environments. Although residential disclosures vary by state, many require disclosures about asbestos on houses built before 1975.

Plumbing Issues

Many problems with plumbing aren’t readily apparent. If you’re aware of plumbing and water related issues such as leaks, old and potentially cracked pipes, consistent issues such as clogged drains, or issues involving access to water shutoffs, broken faucets, or other water related problems that aren’t immediately noticeable but you’re aware of and fail to disclose, can potentially open yourself up to litigation for failure to disclose these problems.

Structural Damage

When homes are built and remodeled, they’re often built correctly, however, unseen defects in construction can often be discovered right after you move in or take some time to notice. In instances such as these, a homeowner may have noticed cracks in their foundation and has made repairs to close the cracks, hydro-lifted portions of the foundation, or other repairs to address these issues. These are very important issues that must be disclosed because they address the integrity of the property.

HVAC Concerns

This may seem like it can be a rather cut and dry issue that is addressed during an inspection, however, we have encountered instances where a home is inspected in the wintertime and the air conditioner isn’t inspected, only to find out that the AC doesn’t work in the spring. These types of failures to disclose the HVAC operative capacity, as well as the condition of these items, can leave a seller open to potential litigation.

The Bottom Line: If you are unsure about what to disclose, meet with your realtor to discuss. From state to state there are some interesting and unusual real estate disclosure laws. There is a legal obligation to disclose the information to buyers, it simply is not optional. There is, however, an advantage for the homeowner that comes with disclosing all pertinent information: The owner removes the risk of a lawsuit and all future liability with their properties after they sell.

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A Realtor’s Fiduciary Duty

The National Association of Realtors indicates that fiduciary duties cover six distinct areas: loyalty, confidentiality, disclosure, obedience, reasonable care and diligence, and accounting. Some—but not all—of these duties are self-explanatory.

Loyalty means a Realtor must act in the best interest of his clients, including placing their client interests above their own. So, for example, if an agent is interested in buying a house that he knows is perfect for one of his clients, he must give the client priority and refrain from making an offer unless and until the client rejects the house.

Confidentiality means Realtors must safeguard their clients’ secrets. Agents often know the lowest price that a seller-client will take, for example, but the agent must keep it a secret. Likewise, if a seller must sell due to an emergency, the agent may not reveal the seller’s distress. Buyer’s agents must also keep their client’s secrets. For example, the highest price that a buyer is willing to pay and that the buyer loves a given house are secrets.

Disclosure means that the Realtor is required to disclose affirmatively all information concerning the transaction as well as the property which might affect the decisions a principal makes, informing the principal what the Realtor knows.

Obedience requires an agent to carry out his client’s legal wishes. No agent is ever obligated to violate the law. In fact, the law calls for fair and honest dealing, no matter whom the agent represents. So if a seller tells an agent to lie about a leaking roof, he is under no obligation to do so. However, if a seller tells her agent to list a house at a given price, the agent must obey. If the price is unreasonable, the agent should encourage the seller to reconsider the price or do as the seller asks, but the agent cannot list it at a different price.

Realtors are obligated to use reasonable care and diligence in pursuing the principal’s affairs. The standard of care expected of a real estate broker representing a seller or buyer is that of a competent real estate professional. By reason of his license, a Realtor is deemed to have skill and expertise in real estate matters superior to that of the average person. As an agent representing others in their real estate dealings, a broker or salesperson is under a duty to use his superior skill and knowledge while pursuing his principal’s affairs. This duty includes an obligation to affirmatively discover facts relating to his principal’s affairs that a reasonable and prudent real estate broker would be expected to investigate. Simply put, this is the same duty any professional, such as a doctor or lawyer, owes to his patient or client.

The duty of accounting means that the agent must account for money and property entrusted to her. Agents must give escrow funds to their brokers or to the client’s attorney who will keep it in an escrow fund. Listing agents must keep track of showings so that they have a record of who has come and gone. They must also ensure that a listed house is secure, either by signing out keys to other licensed agents and accounting for their whereabouts or by hanging a lockbox on the property.

The Bottom Line: Fiduciary abuse is against the law and can leave an agent open to a lawsuit, and it destroys the professional and ethical standing of the real estate agent. As a Realtor, you should always be aware of your fiduciary duties to your clients. It’s a major responsibility and upholding these duties is crucial to developing a strong reputation.

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