Full Disclosure Protects Real Estate Buyers and Sellers
Real estate sales and purchases are some of the largest financial transactions many of us will experience in our lifetimes. Since such a large amount of money and a lengthy time commitment are involved, both buyers and sellers of real estate can often experience remorse after closing the deal. This is particularly true when additional information, which may have changed certain aspects of the agreement or canceled it entirely, is discovered after closing
Fortunately, the policy of “full disclosure” can help protect buyers from potentially disastrous situations, and helps protect sellers against lawsuits. California has one of the most strict set of disclosure laws in the country. Your real estate agent should be fully aware of these disclosure requirements, but a real estate attorney can help you if you have detailed questions about your rights or obligation to full disclosure.
Full disclosure also extends to real estate agents, meaning those who represent either principal must disclose all information known by them about a particular property, whether discovered through their own required diligent visual inspection or learned of otherwise, e.g. from the proverbial nosy neighbor. Full disclosure covers items that might not be immediately obvious, such as:
- any relationship to the buyer
- any information known pertaining to the buyer’s financial ability to complete the transaction
- any other information which would allow the seller to obtain the highest possible price at terms most favorable to the seller
- any personal relationship to the seller, or whether the broker has any interest in the sale
- figures or estimates pertaining to the value of the property
- knowledge of any current offers on the property
- any other knowledge that would allow the buyer to purchase the property at the lowest possible price, under the best terms for the buyer, or for the reverse for the seller
The burden of disclosure, of course, falls most heavily on the sellers, who have the knowledge of information that might affect the “value or desirability” of the property (the legal standard). Sellers, the only way to protect yourselves against post close-of-escrow lawsuits is to disclose fully, and early in the transaction when the parties are not fully invested in the transaction.