I’ve Got a Secret: Disclosures to Sell Your Home

Pictured home: 15-964 Paradise Ala Kai Drive, Kea`au

It’s a Small Town

We once rented a home that developed a problem with the cesspool. While cesspools in East Hawai`i are fairly maintenance free, this particular part of town has underground springs which, during heavy rains, are prone to back ups.

Being an all round good guy, the property manager came as soon as he was called. One of the neighbors became disturbed by the “repair” noise and called the police. Two officers responded. My girls had friends sleeping over that night. One of the friends was the daughter of the first police officer, and the step-daughter of the other! Point is, it’s a very, very small town.

Secrets Don’t Sell Homes

Imagine for a moment that the mainland owner was not aware, or over time, just forgot about the problem. Sellers must disclose all material facts about property. Hawai`i has a large number of absentee owners, so at times REALTORS® have historical or direct knowledge about required disclosures that the seller may not know.

Disclose Everything

When this happens, a supplemental agent’s disclosure is required. As licensed agents, we have no choice. Naturally, the agent should inform the seller so the seller can include the disclosure with their own. Things get sticky if a seller makes a conscious decision to withhold proper disclosures. REALTORS® must disclose or walk away from the listing.

However, what if neither the agent nor the seller has direct knowledge of something that should be disclosed? Sellers and their agents have a duty to fully disclose information that would materially affect the value of the property. In my mind, this includes information that would affect a buyer’s decision to proceed with a purchase. Absent direct knowledge of a potential disclosure issue, disclosure becomes a judgment call. That’s why inspections and supplemental addenda to the contract are so important.

REALTORS® and (especially) absentee owners can’t know every detail about the property. Remember, when new information is discovered or conditions change about a property, an updated disclosure is required.

Again, it’s a Small Town

Interestingly, a natural death is not a material fact and disclosure is not required. It’s a good illustration of how the small town factor might affect a transaction. Potential buyers typically speak to the neighbors, the police department and even other REALTORS®. The fact that disclosure of a death in the property is not technically required may not carry much weight with a potential purchaser who has strong feelings about such things. They’ll probably just wonder if other disclosures were withheld.

So, unlike that old Garry Moore TV show, when it comes to real estate and proper disclosure, telling all you know is no laughing matter. In real estate, there’s no such thing as “I’ve Got a Secret”. It’s best to just tell everything.