Property disclosures
Material facts, latent defects, lead-based paint and environmental red flags.
Property disclosures in one paragraph
Latent vs patent defects
| Latent defect | Patent defect | |
|---|---|---|
| Definition | Hidden. Not found by ordinary inspection | Visible or easy to find on ordinary inspection |
| Example | Cracked foundation behind finished drywall | A large water stain on a ceiling |
| Disclosure | Must be disclosed if known | Still disclose if material, though the buyer can usually see it |
| Exam cue | "Behind," "under," "concealed," "painted over" | "Obvious," "visible," "noticed during the showing" |
Property disclosures: 4 rules to memorize
Disclose known material facts.
Silence about a known defect is misrepresentation.
Pre-1978 means lead paint rules.
EPA pamphlet, disclosure form and a 10-day testing window for buyers.
Latent defects are hidden.
Known ones must be disclosed.
Recommend inspections.
Buyers should verify condition with professionals.
Property disclosures, explained
For housing built before 1978, federal law requires the lead-based paint pamphlet, a disclosure of known lead hazards and records, and a 10-day opportunity for buyers to test unless they waive it. Other red flags include radon, underground storage tanks, mold and flood zones.
Lead paint has more testable detail. The sale contract or lease must include a lead disclosure attachment with the Lead Warning Statement, signed and dated by the seller or landlord, the agents and the buyer or tenant. Copies are kept for 3 years. The rule does not require anyone to test for or remove lead paint, only to disclose what is known and share any records. Agents share responsibility, and violations can mean triple damages plus civil and criminal penalties.
Know the lead exemptions: zero-bedroom units and housing designated for elderly people or people with disabilities only when no child under 6 resides or is expected to reside there; leases of 100 days or less with no possible renewal or extension; qualifying certified lead-free rentals; and foreclosure sales. The 10-day testing window applies to buyers only. Tenants get the pamphlet and disclosure but no testing period.
New Jersey spells out the licensee's job. You must make a reasonable effort to learn about the property's physical condition, at minimum by asking the seller and visually inspecting for readily observable conditions. You disclose material conditions you know about or would have found with that effort. Social conditions and psychological impairments, like a death in the home, are not physical conditions, but if a buyer asks, you answer honestly within fair housing limits.
NJ vs national: New Jersey adds flood risk questions to the seller's disclosure statement and specific rules on stigmas and Megan's Law. See the NJ disclosure topic.
How the exam tries to trip you up
- The seller has no lead records, so the question suggests nothing is required. Wrong. Pre-1978 housing still needs the pamphlet, the Lead Warning Statement and a disclosure that the seller has no knowledge.
- The 10-day lead testing window is for buyers. A tenant gets the pamphlet and disclosure but no testing period.
- Selling "as is" does not let a licensee hide a known material defect. The duty to disclose what you know stays in place.
- Lead disclosure copies are kept 3 years. Do not mix this up with New Jersey's 6-year rule for trust account records.
Property disclosures practice questions
Federal lead-based paint disclosure rules apply to housing built before:
Property disclosures flashcards
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All 7 terms at a glanceShowHide
- Latent defect
- A hidden defect not found by ordinary inspection.
- Material fact
- A fact that would affect a reasonable buyer's decision.
- Lead paint rule
- Applies to housing built before 1978.
- Patent defect
- A defect that is visible or easy to find on ordinary inspection.
- Lead Warning Statement
- Required lead paint language in pre-1978 sale contracts and leases, signed by the parties and their agents.
- Psychological impairment
- A non-physical condition, like a death in the home, that may stigmatize a property.
- Radon
- A naturally occurring radioactive gas that can enter homes from the ground. Testing is common in sales.
Property disclosures: common questions
Sources and further reading
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