Failure to Give Proper Disclosure in Alabama Real Estate

Instructor: Tara Schofield

Tara has a PhD in Marketing & Management

In Alabama, there are several types of disclosures that must be made to the seller and buyer. Learn about some standard disclosures that are needed in a real estate sale.

What Are Disclosures?

You received a call from Sarah a few days ago. She wants you to sell her townhouse to allow her to buy a larger home in the area. You agree to meet with Sarah this afternoon to talk about her property and do the paperwork to become her agent.

There are several types of disclosures in Alabama. The initial disclosure is the agency disclosure, the statement that clearly identifies the type of agency relationship Sarah is establishing with you and your brokerage. You likely will be an exclusive agent to the seller, meaning you represent only Sarah and will focus your efforts to help her market her home.

This disclosure is critical, as the relationship comes with expectations and regulations. If you are working for both the seller and buyer, your interactions with both parties must be neutral and unbiased.

Another vital disclosure is the information you provide about the structure and condition of the home. You are required to be upfront about any significant issues with the home that may affect the purchasing decision of the buyer.

In this situation, you learn that Sarah's house has had some structural issues with the foundation that may be missed by the buyer. The ground has moved enough that there are several cracks in the basement wall that may require reinforcements to be added to the structure. You must disclose this material fact to the buyer, ensuring the potential owner is aware of the problems with the property before they sign the sales contract.

What Disclosures Are Necessary?

You put the home on the market, listing all of its beautiful features. Within days you receive several offers on the property, even with the disclosure of the basement issues. After the sales contract is signed there are many steps that need to be completed, including the seller's disclosure. This statement identifies the condition of the property to the best of the owner's knowledge.

The seller's disclosure includes the status of systems, such as the furnace, water heater, air conditioner, and appliances in the home. The statement gives the seller a chance to give the buyer a heads up on potential problems or issues with the home. Most sales contracts are not voidable based on the seller's disclosure, ensuring there is no risk of losing the sale when the owner provides honest, helpful information for the buyer.

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