This is part one of a three part series inspired by an article I read this morning about an Oregon family who unknowingly purchased a foreclosure property that had previously been used as a meth lab. While most problems discovered by buyers after a home purchase are not as serious as the case in the article, many headaches and lawsuits can be prevented by ensuring that the legally required disclosures are provided to potential buyers upfront.
Next to price, the biggest question many home sellers have is “What do I have to tell buyers about the condition of my home?” There are certain items you are required by law to disclose to potential buyers and others that you may simply choose to disclose.
To tell...or not to tell?
Many people get their information from well intentioned friends and family members, but disclosure rules vary from state to state and they may not have all of the facts. Here is the skinny on Maine real estate disclosure laws.
What if I don’t use an agent and I sell my home by myself?
Whether a Realtor® is involved in the transaction or not, there are certain items that a Maine home seller is required by law to disclose to a potential buyer before an offer is made. To fully protect yourself, you should make these disclosures in writing and have the buyers sign and date them.
Water Supply System: The seller must disclose the type of system used to supply water (city, well, etc.) AND if the property has a private water supply (not city/town water) the seller must disclose:
- The type of system (drilled, dug, shared, etc.;)
- The location of the system;
- Any malfunctions of the system;
- The date of the most recent water test, if any; and
- Whether the seller has experience a problem such as an unsatisfactory water test or a water test with notations.
Insulation: The seller must disclose any information they have about the insulation in the home. There may be times when a seller does not have any information. In this case, they still need to simply disclose that they do not have any information.
Heating System or Heating Source: The seller needs to provide detailed information on the system or source used to supply heat to the property including:
- The type of heating system or source;
- The age of the heating system or source;
- The name of the company that services it; (If the seller has done this themselves, they need to disclose that)
- The date of the most recent service call;
- The annual fuel consumption per heating system or source; and
- Any malfunctions within the past 2 years.
If there is more than one heating system or source, these disclosures must be made for each one.
Waste Disposal System: The seller must disclose the type of waste disposal system used on the property (city sewer, private) AND if the property has a private waste disposal system, the seller must also disclose:
- The type of system (septic, holding tank, gray water, etc.;)
- The size and type of the tank;
- The location of the tank;
- Any malfunctions of the tank;
- The date of installation of the tank;
- The location of the leach field;
- The date of installation of the leach field;
- Any malfunctions of the leach field;
- The date of the most recent servicing of the system; and
- For systems within shoreland zoning, the seller must provide the buyer with a written statement stating whether or not the system has malfunctioned within the 180 day period prior to the transfer (closing of the sale.)
Hazardous Materials: The seller must disclose the presence OR prior removal of hazardous materials or elements on the residential property, including but not limited to:
- Asbestos
- Lead-based paint for pre-1978 homes in accordance with federal regulations
- Radon
- Underground oil storage tanks.
This is where the meth lab case comes in. Although Maine does not yet have a specific law addressing disclosure of properties known to have been used as meth labs, it is now general knowledge that such homes become contaminated with toxic chemicals. A seller trying to hide this material fact would most likely lose in a court of law.
Any Known Defects: This is the catch all category that often gets folks into trouble. This applies to any known physical defects of the home.
When in doubt, I believe it is better to disclose items up front, than not to disclose and risk a potential lawsuit later.
NOTE: Certain transfers of property are exempt, such as court ordered, divorce transfers from one spouse to the other, etc.
When real estate agents are involved in the transaction, there are additional rules for what listing agents can and cannot tell you as well as rules for what your buyer agent must tell you (hint: It is a lot more than the legally required disclosures.) Read more about the disclosure requirements for real estate agents in Part 2 of the series.
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