In addition to the real estate contract setting out information pertaining to the price, financial contingencies, terms, and so on, it is also used for disclosures. For instance, let us say you were interested in buying a house. However, as you walk through, you notice a crack in the basement. Although after having the home inspected by a professional you find the crack is insignificant, the seller would likely want this listed in the contract so after the purchase, the buyer could not come back demanding it be fixed.
Another important type of disclosure is the one pertaining to lead based paint, which can be extremely harmful, if not deadly. Many homes built prior to 1978 were painted with a type of paint that contained lead. If this paint were accidentally ingested, it would lead to lead poisoning. For example, if you had smaller children or pets that were to pull loose paint off the wall and chew on it, you would end up with a serious problem.
Because of the high risk associated with lead based paint, Congress passed a law in 1992 called the Residential Lead Based Paint Hazard Reduction Act. As a part of this law, the Department of Housing and Urban Development coupled with the
Environmental Protection Agency must notify any buyers of risks of lead paint in the disclosure.
The same is true for asbestos. In this case, some houses also built in the early 1970s had popcorn type ceilings sprayed on, consisting of asbestos. When scraped off, the dust particles become highly dangerous. Again, if the seller is aware that the home has asbestos, they are required by law to notify the buyer of such in the discloser. These disclosure items are to make the sale not only fair but also safe.
Remember, all homes, even brand new ones have defects, although they vary in degree. Regardless, knowing these defects would have a direct impact on whether you buy the home. Obviously, you want to best home for your money but also the safest home for your family. Therefore, new laws have now gone into affect, which have helped eliminate the “buyers beware” stigma of home buying. Instead, you have the reassurance that what you are buying is factual in writing on the disclosure.