The deal with disclosure

In a recent continuing education class, an instructor asked a group of Realtors, “Would a seller have to disclose the presence of a halfway house next to their home?” He went on, “What if a neighborhood had been fighting a community pool for years because of noise, traffic and other nuisances caused by it, and the seller of an adjoining house happened to be the one spearheading the initiative … would he or she have to disclose the problems and their struggle?”

The answer is, in most situations, no. The listing agent of that property wouldn’t be obligated to disclose anything either. In fact, that agent would be forbidden from making any such disclosure because it would violate their obligation to work in the best interests of their client, the sellers.

The same goes for disclosures of recent criminal activity on or near the property, such as drug dealing, murder or gang activity, or the perceived presence of ghosts, or the use of the street by noisy busses or ambulances, or other issues that most buyers would probably be concerned about. So why shouldn’t there be a law demanding sellers disclose these things, if they know them to be fact?

The truth is, there are laws about disclosure, and they’re pretty strong. Both the federal government and the District of Columbia have very detailed disclosure forms regarding the presence of lead-based paint that must be completed by buyers and sellers for any home with any part of it built before 1978. D.C. also has a lengthy seller disclosure packet that requires sellers to notify buyers of any known defects with the structure of the house, plus plumbing, electric, and heating and air conditioning systems, and more. Maryland requires sellers to notify buyers of the past year of utility bills too.

You’ll notice, though, that all the disclosures that are required have to do only with the physical characteristics of the house itself: things that, on their own, would stay the same and, if defective, could pose a potential hassle or hazard to any future owner. None of the disclosures required have anything to do with the neighborhood itself, because that is not part of the property being conveyed. Nor do the disclosures need to mention the people in or near the house — past, present or future. That’s because, unlike an A/C system that pumps out warm air, and will do so until it’s fixed, people change all the time. Just because there hasn’t been a murder within a half-mile in 10 years doesn’t mean there couldn’t be one on settlement day, on your own doorstep. The converse is true as well — a record of crime in your new neighborhood won’t necessarily indicate that you’ll ever be in any danger when you move in. The same is true for a murder on the property (no indication of any future murders), ghosts (no such thing), nor noisy busses or ambulances (that’s your job to check, and too easy not to).

At a certain point, the law gives way to common sense, and the obligations of the seller turn into a responsibility to the buyer. If you are about to make a half-million-dollar purchase, you have the responsibility yourself to do a little due diligence regarding your investment. Google your address, find the neighborhood association online, walk the streets at night and chat up the neighbors. That would be a better disclosure than anything the seller would ever provide you anyway, and you’ll be sure to get the real scoop on things.

But, as the instructor warns in his class, “Be sure to do that before you’re under contract, or at least during your general inspection period when you have the opportunity to void the contract”. If you find out there’s a band of cannibals living next door, that’s not necessarily grounds to cancel the contract. If you cancelled anyway, you could lose your earnest money deposit — although it could be worth it to keep your head.

David Bediz is a principal of the Dwight & David Group, LLC of Coldwell Banker Dupont. He can be reached via DwightandDavid.com or 202-352-8456.