What is a disclosure letter?

A disclosure letter in real estate is a document that outlines any known defects or issues with a property that the seller is aware of. This letter is typically required by law in most states, and it is important for both buyers and sellers to understand the purpose of a disclosure letter.

For buyers, a disclosure letter can help them make an informed decision about whether or not to purchase a property. By knowing about any potential defects or issues, buyers can factor those into their offer price and negotiate repairs or credits from the seller. For sellers, a disclosure letter can protect them from being sued by buyers after the sale. If a buyer discovers a defect that was not disclosed in the disclosure letter, they may be able to sue the seller for damages.

The specific requirements for disclosure letters vary from state to state. However, most disclosure letters will include information about the following:

• The condition of the property's structure, including the roof, foundation, and plumbing.
• The condition of the property's systems, such as the heating and cooling system, electrical system, and water heater.
• The property's history, including any known defects or issues.
• Any zoning or environmental restrictions that apply to the property.
• Any money owed by the property they are purchasing and how much the HOA dues are each month, including any special assessments or litigation the property may be in.

It is important to note that a disclosure letter is not a guarantee that the property is free of defects. However, it does give buyers the opportunity to ask questions about any potential problems and to negotiate repairs or credits from the seller.

Depending on your state or geo-location it can be known by another name. Common names for these letters are Disclosure Letter, Estoppel Letter, Resale Letter, Pay-off, Demand Letter. They are all the same type of document.

If you are buying or selling a property, it is important to read and understand the disclosure letter carefully. This document can help you make an informed decision about the property and protect you from legal liability.