Sellers usually don’t know where the line is between information that has to be disclosed and that doesn’t. There are two types of damages; patent and latent. Patent damages include all those defects visible to the eye like a scratch on the floor, a broken window, etc. Since buyers can spot them right away, there is no need to state the obvious.
Latent (aka hidden) damage, on the other hand, can only be discovered by a closer inspection and it refers to major structural defects that could affect the safety, health, and quality of life of the new potential owners. It is not uncommon that sellers are not aware of such defects themselves, but if they are, they are required by law to disclose such information.
What classifies as a latent defect?
- Vulnerability to natural hazards: if you live in an area that often or occasionally is at risk from wildfire, earthquake, floods, etc., you should disclose it to the potential new owners.
- Water leaks, mold and termites are serious issues. Even if the damp patches on the walls and the unwanted visitors are long gone, the potential buyer has a right to know all information concerning such issues whether you dealt with them in the past or are dealing with them right now.
- A leaking roof qualifies as a latent damage and even if you had it repaired, don’t hide it from a potential buyer. They deserve to know how many times the roof was repaired or if they have to do it themselves when they move in.
- Illegal additions to the property or an illegal basement: if your property includes an addition which was built without a permit, you cannot withhold that from future owners. It would be good to consult a real estate lawyer in this case.
- Exposure to lead: If drinking water contains lead, it could be a huge problem. This problem usually relates to older construction homes (built before the 1960s) which may still have lead pipes. You may contact the authorities to check the level of lead in your tap water.
- The knob and tube wiring system: if you have an older construction home with this installation, it should be brought to the attention of interested buyers who may want to closely examine them. Even though they are safe, the problem is that home insurance reluctantly covers for such installations (and the premium is also hefty). As a seller, you can replace the knob and tube wiring and increase the sales price, or leave it as it is, but either way, the buyer has to be informed.