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Lead paint, mold and pesky ghost
Sellers, if you don't disclose all you know about your house, it could come back to haunt you.
April 4, 2005: 9:02 AM EDT
By Sarah Max, CNN/Money senior writer

SALEM, Ore. (CNN/Money) When your house is on the market, you brag about its best features. When you accept an offer, however, you'll need to disclose all of its flaws.

Some are obvious, like water damage or termites. But it's your obligation to come clean about everthing -- even the ones that might just be a figment of your imagination.

"If you felt the house was haunted, then yes you should disclose it," said Todd Marks, a real estate agent with Prudential John Aaroe in Beverly Hills, Calif. "We walk sellers through the form and ask questions like, 'Is there anything you need to disclose that's not visible to the eye?'"

That includes everything from ghost sightings to errant golf balls from a nearby course.

The precise rules vary from state to state, but in most cases sellers are required to disclose everything they know about the property soon after accepting an offer.

Doing so gives buyers a heads up on problems before they go through with the home inspection, and it helps protect sellers from lawsuits down the road. If the buyers sign on the dotted line knowing that the house has a leaky roof or termite damage, they can't point fingers at sellers after the closing.

"If you have to ask whether or not you have to disclose it, you've already answered the question," said Ray Brown, a broker with Pacific Union in San Francisco and co-author of "House Selling for Dummies." In the long run, he said, it's better to disclose too much than not enough.

In many states, though, disclosure rules aren't just limited to the physical traits of the house. Sellers need to disclose information about murders, suicides, freak accidents and any other event that might "stigmatize" the house and detract from its value.

"In California any type of death has to be disclosed if it's happened in the last three years," said Marks.

Several years ago, Marks represented the buyer in the sale of a house where someone committed suicide by hanging. "The buyers didn't care," he said. In fact, they made an offer on the house before it was even on the market.

Other buyers, though, are more superstitious.

"I have had clients who won't even look at a house if the people selling are getting divorced," said Karen True, a real estate agent with the Corcoran Group in Palm Beach, Fla.

Sellers aren't required to disclose such personal information as their marital status or reason for moving. But in some states, they are asked to disclose nuisances related to the neighborhood, such as airplane traffic, train tracks, annoying dogs and difficult neighbors.

"I represented the sellers of a new house that was next door to a house everyone thought was haunted," said Susan Clowdus, a real estate agent with Coldwell Banker Bullard Realty in Atlanta, who staked out the property with her husband one night and saw the apparition herself. "Every night at a certain time a light came on and from in the window you saw what looked like a woman in the chair rocking."

Disclosure or no disclosure, word gets out. "It took a while for the house to sell, but it eventually did," she said.

What did the buyers think of their phantom neighbor? "They said, 'There's no such thing as ghosts.'"  Top of page

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