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What Are Sellers Required to Disclose About a Property?

It’s a small town. People tend to know their neighbors’ business. We once rented a home that developed a problem with the cesspool. While cesspools in East Hawaii are fairly maintenance-free, this particular part of town has underground springs that sometimes cause back-ups during heavy rain.

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Being an all-around good guy, the property manager came as soon as he was called. One of our neighbors became disturbed by the “repair” noise and the 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! The point is, it’s a very, very small town.

The Importance of Proper Disclosure

Imagine for a moment that the mainland owner was not aware or just forgot about the cesspool problem. Sellers must disclose all material facts about property. Hawaii 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. 

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 that in the alternative the seller include the disclosure along with their own.

Things get sticky when and if a seller makes a conscious decision to withhold proper disclosure. REALTORS® must disclose or walk away from the listing. But what if neither the agent nor the seller has direct knowledge of something that might need to 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, updated disclosure is required.

Interestingly, 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.

Bottom Line

So, unlike that classic Garry Moore TV show, when it comes to real estate and proper disclosure, telling all you know is no laughing matter. It’s best to just tell everything you know…and hope it’s enough!

About the Author

Denise Nakanishi

Denise Nakanishi is a REALTOR Broker with Hawai'i Life. Denise Nakanishi is one of Hilo's most acclaimed real estate agents. She reached the rank of Major in the US Army and is now known by many as "Major Mom." The nickname fits–not only does Denise bring the discipline and mission-oriented attitude you'd expect, she's also caring and compassionate, always looking out for her clients like they're her own family. Having made the Big Island her home since 1987, Denise combines her extensive knowledge of the area with a sharp focus on customer service and the results speak for themselves. She's the recent recipient of the Best East Hawai`i, Best of Zillow, Chairman's Circle Award, President's Circle, Top Producing Agent since 2001, and Realtor of the Year awards. Denise stays ahead of the curve because she's passionate about education–she served as Education Chair for Hawaii Island REALTORS® for many years. She's one of Big Island's best real estate resources, known for her weekly article in the Hawaii Tribune Herald. Denise leads Team Nakanishi for Hawai`i Life, who is committed to their family, work, and community. In her little time away from work, Denise is a committed runner and Grandy. She also devotes many hours to various Veterans' Organizations, the East Hawaii Cultural Center, and the Hawaii Island REALTORS®. You can email me at denise@hawaiilife.com or via phone at (808) 936-5100.

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