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When you've found a house you
want to buy, you'll ask the seller for a Seller's
Disclosure report. This is a form that a
seller must give a buyer, which details all
physical problems and defects that the seller is
aware of. This is like the car lemon law, but for
houses. It's a big crime for sellers to fail to
disclose any problems they're aware of. Note,
however, that it's no crime if the seller doesn't
report a problem on the form simply because (s)he
wasn't aware of it. (Note: All this refers to the
law in Texas; I don't know about the laws in other
states.)
Besides the disclosure, he seller must also give
the buyer a federally-approved pamphlet about lead
hazards in building materials. The seller's
disclosure will list any lead paint or other lead
items that the seller is aware of.
If the items on the Seller's Disclosure seem
major, you can try to negotiate to have the seller
fix them or to lower the price. Or, the price may
have already been set low to take into account any
problems with the house.
While the disclosure provides you some
protection, notice the big loophole: The seller
doesn't have to report any problem that (s)he's
unaware of. If you buy the house and discover a
problem, how can you tell whether the owner knew
about it? And even if you're sure the owner knew
about it and neglected to put it on the disclosure,
could you prove so in court? And if you think your
case is strong and you could prove so, would you be
willing to actually file a lawsuit, and would you
have the money to do so? The moral here is that
while the disclosure gives you some protection,
don't make the mistake of thinking that it provides
you with ironclad, 100% protection against
undisclosed problems with the house. For better
information about problems with the house, you'll
hire a professional inspector to check out the
house and provide you with a detailed, written
report about any problems they find. We'll cover
that a few steps from now.
If you think the price is too high given any
problems listed on the disclosure, or if the seller
won't make repairs and you're unwilling to do them
yourself, then you'll have to start over with
another house. Otherwise, if the Seller's
Disclosure didn't scare you off, then you'll
proceed to signing the contract....
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