If you are buying a home in Wisconsin, as part of that process you will likely receive a filled-out disclosure form from the seller. Wisconsin state law requires that home sellers disclose any condition or defect that would result in a significant negative effect on the property value, significantly impair the health or safety of future occupants, or significantly shorten or negatively affect the normal life of the property.
The language of the form can be found in Chapter 709 of the Wisconsin statutes.
Carefully reviewing the seller’s disclosure document will help you to determine whether defects to the property will require financial negotiation or repair prior to closing, or whether the flaws are substantial enough for you to walk away from the purchase and begin your home search anew.
One of the most important things to keep in mind upon receipt of the disclosure report from the seller is that the report is not a warranty. In other words, the seller is not making any sort of guarantee that the property is in perfect condition – few houses are.
Also realize that your seller must, in order to be responsible for disclosing a defect to you, be aware that it exists in the first place, and must reasonably believe that the defect will have a significant negative effect on the property. As long as the seller completes the disclosure form in good faith, he or she cannot be held responsible for unknown flaws that come to light after the closing has taken place.
Most buyers will have little idea of who the seller is, much less whether the seller is savvy enough to be able to identify all major problems existing in the property up for sale. The disclosure form is therefore only one tool to be used in determining whether the property is free and clear of any major problems.
The Wisconsin disclosure form itself is fairly straightforward in its format. The seller is asked a series of questions and must answer “yes,” “no,” or “N/A.”
For example, one question asks whether the seller is aware of any defects in the well water. The seller would answer in the affirmative if he or she was aware of such a problem. The seller would answer in the negative if he or she was not aware of any problems with the well water – which, again, does not mean that you’re guaranteed that no such problems exist. The seller would answer “N/A” if the property did not use well water. The seller must provide additional information for any question answered in the affirmative.
The form also requires the seller to identify any defect that is a problem with regard to the land itself, a structural flaw, or an unfavorable condition. The seller must also identify whether the property is designated as a historic building or if part of the property is in a historic district.
Near the end of the form, the seller must disclose how long he or she has lived on the property. This is helpful information to have, because a seller who lived in the property for one year likely has far less knowledge as to certain topics covered by the form than would a seller who had lived in the property for 20 years.
Carefully review the answers to all of the questions on the disclosure form and compare those answers with your own observations of the property. Any “yes” answer to a question on the form should include a clear explanation of the defect, either written under the question itself or listed in Section D3 of the form.
If the explanation provided by the seller is unclear or inconsistent with other answers, you could request that the seller revise the disclosure form. If the explanation is acceptable but shows a defect, think about whether the defect is significant enough to negotiate over before agreeing to close the sale.
You should review all questions answered with “N/A” or “No” and determine whether those answers make sense based on responses to other questions. You should also compare these answers to what you remember from the house showing. If something seems missing or incorrect, you could request that the seller revise the disclosure form.
It’s also worth not only having a professional inspector examine the property and prepare a report, but supplying that inspector with a copy of the seller’s disclosure report so that the inspector can follow up on any issues noted there. The inspector is an expert who can either confirm the existence of a problem or provide peace of mind that the disclosed defect is not as substantial as you may fear.