What is a Seller's Disclosure Statement?

The Seller’s Property Disclosure (or property statement) is a document designed to assist the Seller in disclosing to prospective buyer(s) material adverse facts regarding the physical condition of the property that may not be readily visible. The statement discloses historical information and past problems. Property owners are required to provide honest and accurate information. It also identifies those fixtures or items included in the sale of the property. The disclosure document is in the form of questions and answers. Willingly providing false information is considered "misrepresentation" and can be used by the buyer to proceed legally against the seller. In some states, failure to provide the purchaser with a copy of the disclosure statement gives the buyer the right to rescind the transaction and have his/her earnest money refunded. The property disclosure statement is not intended to replace an inspection of the property by buyer. In 1969, the Department of Housing and Urban Development (HUD) enacted legislation aimed at protecting purchasers of property in new subdivisions from fraud and misrepresentation. The purpose of this law is to require developers to give prospective buyers extensive disclosures regarding the lots in the form of a property report.