The Importance of Disclosures in Real Estate Contracts

15 November 2025

Buying or selling a home is a big deal. It’s not something most of us do every day, and let’s be honest—it can feel a little overwhelming. Between the paperwork, the inspections, the negotiations, and the legalese, there’s a lot to keep track of. One of the most critical, and often misunderstood, parts of a real estate transaction is the disclosure.

So, if you’re asking yourself, “What are disclosures in real estate, and why should I care?”—you’re in the right place.

In this article, we’re going to break it all down for you. We’ll look at what disclosures are, why they matter, what needs to be disclosed, and what happens if someone skips them. Whether you’re a first-time homebuyer, a seasoned investor, or just curious, you’ll find everything you need to know right here—written in plain English.

What Are Disclosures in Real Estate?

Disclosures are exactly what they sound like—things that need to be disclosed, or revealed, about a property during a real estate transaction. They’re legally required statements from the seller about the home’s condition, history, and any known problems that could affect its value or safety.

Think of disclosures as a seller’s version of “full transparency.” It’s like someone selling you a used car and saying, “Just so you know, the brakes squeak a little, and it’s had some fender benders.” You’d want to know that stuff before you made an offer, right?

Well, homes are no different—except we’re talking about hundreds of thousands of dollars (or more) on the line.

Why Disclosures Matter So Much

You wouldn’t buy a product online without reading the reviews first, would you? Disclosures are a bit like those reviews, except they come directly from the seller and are supported by legal responsibilities.

1. Protecting Buyers

For the buyer, disclosures are a safety net. They give you a clearer picture of the home beyond what you can see during a showing. Maybe the beautiful basement has a history of flooding, or the roof was patched after a storm. These details help you make an informed decision—or at least brace for what you're getting into.

2. Protecting Sellers

Wait—aren’t disclosures bad news for sellers?

Not at all. In fact, providing full and honest disclosures can protect sellers from future lawsuits. If a buyer finds a major issue after closing—something the seller knew about and didn’t reveal—it could become a legal nightmare. But if the problem was disclosed upfront and accepted by the buyer, the seller is usually off the hook.

3. Strengthening Trust

Let’s face it: the real estate world can feel a bit... well, shady. Transparency through disclosures helps build trust between buyers and sellers. It sets the tone for an honest transaction.

Common Types of Real Estate Disclosures

So what exactly needs to be disclosed in a real estate contract? While the specifics can vary from state to state (and even by city), here are some of the most common types of disclosures you’ll come across:

Property Condition

This is the big one. Sellers are usually required to list any known issues with the property. This includes:

- Roof leaks or damage
- Plumbing or electrical problems
- HVAC issues
- Structural defects
- Mold, mildew, or pest infestations

Environmental Hazards

Has the property ever been exposed to toxic substances? Think asbestos, lead paint, radon, or underground oil tanks. These can pose health risks and are almost always required to be disclosed.

Water Damage or Flood History

If the home has previously flooded or sits in a federally designated flood zone, that needs to be mentioned. Some states even require sellers to disclose if a sump pump has ever been installed due to water issues.

Pest Infestations

Termite damage, signs of rodents, bed bugs—you name it. Buyers need to know if any creepy-crawlies have made themselves at home.

Legal Issues

Is the property part of an ongoing legal dispute? Are there boundary issues or easements? Any liens or unpaid taxes? That’s all stuff that needs to be brought to light.

Neighborhood Nuisances

This one’s a bit trickier, but in some areas, sellers must disclose known issues like noisy neighbors, barking dogs, or proximity to airports or train tracks.

What Disclosures Are Not

Disclosures aren’t a home inspection, and they’re not a guarantee.

They’re simply the seller’s honest account of what they know about the home. That’s why buyers should still hire their own inspector and do their due diligence.

Think of disclosures like a window into the home’s past—but not necessarily its future. Just because a problem hasn't happened yet doesn’t mean it won’t happen later. Again, full transparency is key.

What Happens If a Seller Doesn’t Disclose?

Here’s where things get serious.

If a seller fails to disclose a major issue—and the buyer later discovers it—they could be in legal trouble. In some cases, buyers have sued after discovering hidden issues and won. Courts often side with buyers when it’s proven the seller knowingly withheld information.

On the flip side, if a seller discloses an issue in writing and the buyer still agrees to purchase the home, the seller is usually protected. It's all about documentation and honesty.

Are Disclosures Always Required?

In most states, yes. However, some allow “as-is” sales with limited disclosure requirements. For example, in states like Alabama and New Jersey, the rule is "buyer beware"—meaning the seller isn’t required to disclose much at all.

But even in these states, hiding a known issue can still lead to legal consequences if the court sees it as fraud or misrepresentation.

Also, keep in mind that a real estate agent, by law, must disclose any known material defects—even if the seller doesn’t.

Tips for Buyers: How to Handle Disclosures

Alright, buyers—this one’s for you. Here’s how to make sure you’re handling disclosures the smart way:

Read Everything (Yes, Everything)

It might be tempting to skip over the paperwork in the rush to close the deal. Don’t. Disclosures are where the skeletons live, and reading them closely can save you from a nightmare later on.

Ask Questions

See something that doesn’t make sense? Ask. If the roof was repaired, ask when. If there’s mention of pests, ask if it was treated. Don’t be shy. This is your future home we're talking about.

Get a Home Inspection

Even if the seller says everything is peachy, bring in a professional to confirm it. Think of it as a second opinion—and a very smart investment.

Don’t Panic, But Be Realistic

Some disclosures are more serious than others. A cracked tile? No big deal. A cracked foundation? That’s a biggie. Weigh your priorities and decide what you can live with (and what you can’t).

Tips for Sellers: Getting It Right

And sellers—we haven’t forgotten about you. Here’s how to stay on the right side of the law and protect yourself:

Be Thorough

When in doubt, disclose it. If you’re unsure whether something counts, include it anyway. It’s better to overshare than to get sued later.

Keep It Honest

Don’t sugarcoat things or try to spin them. Buyers appreciate honesty, and courts demand it.

Update As Needed

If something changes during the sale (like a pipe bursts or the A/C fails), update your disclosure forms immediately.

Use a Standardized Form

Most states have official disclosure forms. Use them. They’re designed to cover the most common issues and protect everyone involved.

Final Thoughts: Disclosures Are a Good Thing

At the end of the day, disclosures aren’t about scaring buyers or burdening sellers. They’re about fairness, trust, and keeping deals clean.

Sure, it might not be fun to talk about things like mold or roof leaks. But the truth is—every home has a history. And when that history is out in the open, everyone can move forward with confidence.

So whether you're buying or selling, take disclosures seriously. Read them carefully. Fill them out honestly. And remember: a little paperwork today can save a mountain of problems tomorrow.