What Is a Disclosure Package?

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If you’re in the market to buy a house, you may have heard the term “disclosure package.” Today, I’ll discuss what documents are included in a disclosure package and some tips for what to look for when reviewing them.

A disclosure package is a collection of documents, reports, inspections, and questionnaires that a seller prepares for potential buyers. They do this because they want to disclose everything that they know about the property so that they’re not liable in case some issues arise for the buyer after they purchase the house.

The buyer’s agent should review this document in detail before writing an offer on a property. This includes the transfer disclosure statement, the seller property questionnaire, and the local supplemental questionnaire. The questionnaires are forms that the seller fills out, describing anything that would materially affect a buyer’s decision to purchase.

For example, they might ask if there has been a death on the property within the last three years, if the property is part of an HOA, if any work has been done (with or without a permit), if there are any noise problems in the area, if any insurance claims were filed within the last year, if there are any pets in the home, and so on. If the answer to any of those questions is ‘yes,’ they will then elaborate further on those issues.

A natural hazards disclosure maps out any potential environmental hazards associated with the property, such as whether it’s in a flood zone or if it’s at risk for fires, earthquakes, and other such dangers. Additionally, it will cover whether the property is affected by airplane noise or if there are any hazards caused by pollution or underground storage tanks.

Home inspections reports are done by a licensed and certified home inspector. They do walkthroughs and look at the home’s condition—whether or not things are built to code—and will know what needs attention or needs to be replaced. This is called a general inspection because they don’t actually specialize in any particular area, but they know enough about each area to notify you if an expert is needed to further inspect or repair something. When reviewing a home inspection, you should make sure that the inspector is reputable.

Keep in mind that a home inspection does not mention cost estimates in the report. For an idea of what certain repairs or improvements will cost, you need to get a bid from a contractor that you trust.

Pest inspection reports, otherwise known as a termite report, mainly deal with the wood areas of a house to point out if there is any dry rot, fungus, and of course, termite activity. They’re typically broken down into two sections. Section one items are problems like dry rot on the deck, whereas section two items are not currently problems, but could be if left unattended, like a loose toilet in the bathroom.

Standard advisories are documents that go over the standard practices and conditions present within certain areas and disclose to buyers potential issues they may run into. They include state and local real estate advisories, lead-based paint disclosures, smoke alarm and carbon monoxide disclosures, water heater bracing disclosures, Megan’s law disclosures, and so on.

If you’re buying a condo or townhouse, you’ll be provided with the HOA documents. You’ll receive CCNRs and bylaws for the HOA, which are basically the rules you’ll have to abide by if you decide to purchase a property within the community. These cover the rules for remodeling, pets, landscaping, parking, and more. You’ll also receive HOA insurance information, financial statements, and meeting minutes for the last several years.

It’s important that you review all of these reports in great detail and send them to your lender before purchasing to limit any potential issues arising from a loan.

If you have any questions or you’d like to learn more, feel free to give me a call, send an email, or visit my YouTube channel. I’d be glad to help you out.