Skip to main content

Sellers Disclosure Statement – Your Ticket Out of a Lawsuit

A Sellers Disclosure Statement (SDS) is a statement of condition, required by law in many states. It should be completed by the seller and provided to the buyer on every listing, except those exempted by law. By the way, if you ask your agent for help and they decline, they are not being difficult; it is illegal for your agent to advise, interpret or complete any part of the form on your behalf.

When I pull that two-page, eight-point font, triplicate form out of my briefcase, I almost always see eyes bulging and signs of hyperventilation from my sellers. I agree it is a bit ominous, but the Sellers Disclosure Statement is actually your ally. Allow me to convince you…

The items on the SDS are there to inform the buyer of certain conditions relating to the condition of the property–and informing the buyer, protects the seller. The conditions and defects disclosed in the SDS are part of the “AS IS” condition in your purchase agreement. For this reason, the SDS should be completed as thoroughly and honestly as possible and presented to the buyer prior to their making the offer. I upload my Sellers Disclosure Statements online for everyone to view prior to writing an offer. I also require the buyers’ signature on the SDS to accompany the buyer’s offer.

If the seller informs the buyer up front on the SDS that, for example, they have had “evidence of water in the basement during a heavy rain”, the buyer cannot sue the seller later when they experience “evidence of water in the basement during a heavy rain”.

Providing full disclosure of any defects on the SDS to the buyer in advance of their writing an offer also virtually prevents the buyer from legally withdrawing from the sale during their inspection period citing any of the previously disclosed defects as the reason for dissatisfaction. Written disclosure is essential. Mentioning the beautiful duck pond in the backyard after the spring thaw to the buyer during their closing walkthrough is not proper disclosure of a grading problem.

Just tell the truth and the whole truth. Chances are the buyer will find out when they move in any way after the friendly neighbors tell them the entire history of the house.

Might the offer be a little lower to compensate the buyer to repair the disclosed defect? Maybe…so what? Every house has defects and little projects that need attention. Let’s be honest, if you were going to repair the problem, you would have already done so prior to listing the property. Provide for the repair then if it comes up, it is the price of passing the problem on to the buyer. It is also your ticket out of a lawsuit.

Disclose, disclose, disclose.


Leave a Reply