Like all states, the District of Columbia once subscribed to the notion of caveat emptor, or "buyer beware," in real estate sales. This meant, in essence, that sellers of real property did not have to proactively disclose to buyers any problems or defects in the property: If buyers didn't figure out the problems, they couldn't hold the seller liable later.
Now, however, D.C. requires all property sellers to make various disclosures to buyers. Unlike in some states, buyers cannot waive their right to receive them. Fortunately for home sellers, D.C. has included on one standard form all disclosures a seller must make about the property. Here, we'll explain what you'll need to tell buyers on that form, and how this fits into your home selling transaction.
Under § 42–1301 and following sections of the D.C. code, sellers of residential property having no more than four units must give prospective buyers a real property disclosure statement; and must do so before or at the time of executing a purchase agreement. The law contains a few narrow exceptions to these requirements, mainly relating to properties being transferred with a court's oversight, for example in a probate or foreclosure situation.
Despite having a real estate agent or broker handling your property sale, it is your responsibility as a seller to fill out the Disclosure Statement. You will, after all, be the one liable if you fail to disclose something. (Brokers have some separate, direct responsibilities toward buyers, however, which we don't discuss in this article.)
The exact language of the Real Property Seller's Disclosure Statement, including a Word version of the form, can be found on the District of Columbia website. Your real estate agent, assuming you use one, will no doubt have a prepared version for your use.
You may deliver this to the property buyer in person, by fax, or by mail. (See D.C. Code § 42–1309.) There's a tight deadline for doing so: It must be delivered before or at the time you and the prospective buyer sign a purchase agreement. If it's delivered later, the buyer may terminate the purchase agreement within the following five calendar days, and will be entitled to the return of any deposit funds.
The D.C. Disclosure Statement covers a number of items, from physical to environmental and more.
It will ask you to describe the property's features and their condition, with respect to the house's structure (such as the roof, chimney, insulation, and windows), systems (such as heating and air conditioning), and appliances and fixtures (such as an oven, dishwasher, pool heater, and fans).
It covers exterior or environmental issues such as drainage, damage to the property, and the presence of wood-destroying pests. The Statement also requires you to disclose the presence of any toxic substances such as asbestos, radon, and formaldehyde, as well as any zoning violations and unrecorded easements. Sellers must also disclose whether the property has any significant historical designation or is subject to a historic preservation law.
The Disclosure Statement requires you to make all disclosures to the best of your knowledge and in good faith. If you honestly don't know whether a particular defect or condition exists, it's acceptable to check the "No" box on the form. When in doubt, however, your best path is to disclose.
Also, although you do not have to hire inspectors to check the property before filling out the disclosure form, doing so can be a good idea. That way, you'll have a chance to repair defects instead of having to disclose them. Also, if buyers ask for specific information, you can give them the inspection report that addresses that area. By doing this, you can avoid being found liable for defects that appear later, as long as they were within the scope of the inspection. (D.C. Code § 42-1303(c).)
The same disclosures are required for condominiums and cooperatives.
If, after you have delivered the Disclosure Statement and signed the purchase agreement, the Disclosure Statement becomes inaccurate for any reason, this does not give the buyer cause to cancel the purchase. For example, if you later find out that your home is a historic landmark, the buyer cannot cancel the contract just because you did not include this in the Disclosure Statement.
Nevertheless, if you discover the Disclosure Statement is inaccurate shortly after the sale, it is usually a good idea to tell the buyer what you have found.
If your house was built prior to 1978, you will also need to comply with a federal law on property disclosure, namely the "Residential Lead-Based Paint Hazard Reduction Act." This is a matter of telling buyers of any known lead-based paint, dust, or soil on the property; giving them copies of any written reports of lead evaluations done there; allowing a ten-day period for them to conduct their own tests; and providing them with a pamphlet approved by the U.S. Environmental Protection Agency (EPA).
This pamphlet is available on the Protect Your Family from Lead in Your Home - Real Estate Disclosure page of the EPA website.
While it can seem simple enough as a seller to disclose what you know about your property, it is important to take your time in preparing the disclosure form. If you wait until the last minute, you could forget to mention important issues.
Also consider getting professional advice. Even if everything in your home seems to be working property, if the buyer moves in and the roof starts leaking, you could find yourself at the wrong end of a lawsuit. It is often a good idea to get your property inspected and if you have any concerns about required disclosures or liability, to seek out the guidance of a reputable real estate attorney.