Reviewed by: Brandon Brown

Selling a home comes with a lot of paperwork, and one of the most important documents in any real estate transaction is the Disclosure Statement. This legally required document ensures that buyers have access to important information about the property’s condition before they commit to the purchase. In short, it’s a way for sellers to be upfront about known issues, protecting both parties from potential disputes down the road. Each state has different disclosure requirements. Some states, like California, have strict laws, requiring sellers to disclose nearly everything. Meanwhile, other states, like Alabama, take a buyer-beware approach where the buyer must investigate potential issues. Understanding what needs to be included in a seller disclosure statement is key for anyone looking to sell a home the right way. In this guide, we’ll walk you through the nature of seller disclosures, and how they can impact your home sale.

Understanding Seller’s Disclosure

Definition and Purpose

A seller disclosure is a document that legally requires sellers to provide buyers with a full report on the property’s condition. This report lists any known defects, past damages, or ongoing issues that could impact the home’s value or safety. The purpose of seller disclosures is to ensure honesty in real estate transactions, reducing surprises and protecting both parties from future problems.

Why Seller Disclosures Matter

• Protects both parties – Buyers know exactly what they’re getting their money into, and sellers lower their risk of legal problems.
• Required by law – In most states, a seller disclosure form is a mandatory part of a real estate transaction.
• Prevents last-minute surprises – By being upfront about known issues, sellers can avoid deal cancellations or renegotiations during the closing process.

What Disclosures Are Required When Selling a House?

So, can you sell a house with foundation issues? Yes! But buyers may negotiate a lower price or request repairs before buying. Still, sellers are legally required to complete a seller disclosure form, which includes a variety of known issues that could affect the home’s value or livability. Here are some of the most important things a seller disclosure statement typically covers:

Structural and Safety Issues

Structural problems can be a major red flag for buyers, which is why sellers are required to disclose any:

• Foundation cracks
• Roof damage
• Electrical malfunctions
• Plumbing concerns

If the home has serious defects that impact safety, like a crumbling foundation or outdated electrical wiring, they must be included in the property disclosure.

Environmental and Health Risks

Environmental hazards are another big category in seller disclosures. If the home was built before 1978, federal law requires sellers to disclose whether the property has lead-based paint under the Lead-Based Paint Hazard Reduction Act. Other common disclosures involve:

• Lead-based paint (required for homes built before 1978)
• Asbestos insulation or tiles
• Mold or mildew
• Radon gas or pest infestations

Each of these could pose serious health risks to the new owner.

Water Damage and Past Repairs

Water-related issues are some of the most commonly disclosed problems in home sales. Sellers must disclose whether the house has experienced:

• Flooding history
• Plumbing failures
• Leaky roofs or plumbing
• Hidden damage from previous repairs

Even if past repairs were made, homeowners still need to provide details about any recurring issues.

Legal and Neighborhood Disclosures

Beyond the home’s condition, sellers must also disclose legal and neighborhood-related concerns, such as:

• Homeowners Association (HOA) rules and restrictions
• Zoning changes or upcoming developments
• Property line disputes with neighbors
• Ongoing lawsuits involving the home

Neglecting to disclose these factors could cause major headaches for both the buyer and seller after the closing.

Additional Disclosures That May Be Required

While the most common disclosures involve structural and environmental issues, some states require sellers to provide details on additional factors that may influence a buyer’s decision:

Deaths in the Home

• Some states require disclosure of deaths that occurred on the property, particularly if they happened within the last few years.
• California, for example, mandates that sellers disclose any deaths on the property within the past three years.
• Murders or suicides may need to be disclosed depending on state laws, but natural deaths often do not.

Liens on the Property

• Sellers must inform buyers if there are any outstanding liens on the property, like a HELOC outstanding balance. This is just as important as reporting structural issues or past repairs in the seller disclosure statement. You can still sell a house with a HELOC but you would have to settle with this before closing.
• A lien means that a lender has a legal claim on the property due to unpaid debts, which could complicate or delay the sale.

Nearby Nuisances

• Some states require sellers to disclose external factors that might affect the buyer’s living conditions.
• This includes proximity to airports, landfills, farms, shooting ranges, or noisy highways.

What Happens If a Seller Hides Property Issues?

Failing to disclose required information in a real estate transaction isn’t just risky—it can have serious legal and financial consequences. Here’s what could happen if a seller fails to disclose known issues:

Legal Consequences

If a seller knowingly hides defects or fails to include required disclosures, they could face lawsuits for misrepresentation or fraud. Buyers who discover hidden problems after closing can take legal action, which could result in hefty settlements, forced repairs, or even contract cancellation. Since failure to disclose known defects can lead to legal trouble, many homeowners rely on realtors to help handle complex disclosure laws—one reason why realtor fees are so high.

Lost Deals and Delays

Buyers typically conduct a home inspection before completing the purchase, and if they uncover undisclosed issues, they may walk away from the deal. Even if they don’t back out entirely, it could lead to renegotiations, delays, or demands for seller compensation.

Post-Sale Liabilities

Even after the home sale closes, sellers may still be responsible for undisclosed defects. In some states, buyers can file legal claims months or even years later if they can prove the seller knowingly withheld information about a major issue.

Are There Exemptions to Seller Disclosures?

Not every home sale requires full disclosures. Some exceptions include:

• Foreclosure or court-ordered sales – Properties sold under legal orders, like foreclosures, usually don’t require seller disclosures.
• Sales between family members – If the home is transferred between relatives, formal disclosures might not be needed.
• Government property sales – Homes sold by government agencies may follow different rules.

Knowing these exceptions helps sellers understand their responsibilities in different types of transactions.

How to Review a Seller Disclosure as a Buyer

Tips for Buyers

If you’re buying a home, carefully reviewing the seller disclosure statement is essential. Here’s what to look for:

• Check for red flags – Pay close attention to disclosures about foundation issues, water damage, or outdated electrical systems.
• Look for recurring repairs – If the seller discloses multiple repairs on the same system (roofing, plumbing, etc.), it may indicate ongoing issues.
• Review disclosures related to the neighborhood – Make sure there are no surprises about zoning laws, HOA fees, or disputes with neighbors.

Sell Your Home Stress-Free with FlipSplit

Dealing with seller disclosures can be a hassle, especially if you’re not sure what needs to be disclosed or if you’re worried about a buyer backing out. That’s where FlipSplit comes in. With FlipSplit, you don’t have to worry about lengthy disclosure forms or the risk of hidden issues coming back to haunt you. We buy homes as-is, meaning sellers aren’t required to go through complicated inspections or list out every single known issue.

Why Sell to FlipSplit?

• No lengthy disclosure forms – FlipSplit purchases homes in any condition, eliminating the need for complicated paperwork.
• No risk of post-sale liabilities – Because we buy as-is, sellers don’t have to worry about undisclosed defects leading to legal trouble.
• Sell fast, without repairs – Unlike traditional home sales, you don’t have to fix up the property or wait for a buyer to sign an agreement.

We make selling simple and stress-free, helping you move forward with confidence and ensuring you receive a fair offer.  

Reviewed by: Brandon Brown

As a long-time Asset Manager, Investor, Real Estate Agent, and Broker/Owner of BayBrook Realty in Orange County, Brandon Brown is one of FlipSplit’s lead Real Estate experts. Having worked on over 2,000+ real estate transactions, Brandon brings a depth of knowledge that ensures clients are appropriately treated with honesty and integrity. His insights and advice have been published in numerous blogs beyond FlipSplit, and he keeps a close eye on market trends and statistics, which are updated weekly on his social media pages. Outside work, you can find him participating and serving at church, cycling, mountain biking, surfing around Orange County and beyond, and enjoying time with his wife and two daughters.

Sources:

1. The Investopedia Team. (2025). Buying a home: 8 important seller disclosures. Investopedia. https://www.investopedia.com/articles/personal-finance/061214/real-estate-flipping-8-disclosures-you-must-make.asp
2. New South Lawyers. (2024). What is a seller’s disclosure statement? New South Lawyers. https://newsouthlawyers.com.au/what-is-a-sellers-disclosure-statement/
3. Pritchard, J. (2024). Seller’s disclosure: What you need to know. Bankrate. https://www.bankrate.com/real-estate/sellers-disclosure/