When it comes to transactions related to real estate, one should make sure that the necessary agreements and statements are in proper order. Transfer disclosure statement is one such important document that not only benefits the buyers but is also an important document that benefits sellers from possible lawsuits in the future.
A lawsuit can follow a seller even after a transaction in real estate is complete , if they failed to give critical information about the property at the time of sale. Most of the time the information shared in a transfer disclosure statement is critical that cannot be found by the buyer without an all-invasive property inspection.
When is it required?
In the case of standard residential leases, a transfer disclosure statement is not necessary but it becomes a necessity if the same property is put in the market with an option for sale. It also applies to standard property agreements, as well as land sale contracts. A transfer disclosure statement is also applicable to properties that consist of one to four residential units.
The following section sheds light on some of the many cases when a transfer disclosure statement is mandatory:
- Transfers by a seller who acquired the right to sell by judicial foreclosure,
- Deed or trustee sale in lieu that also includes REO transactions;
- Transfers by a guardian, trustee or executor who exercised their right to administer the property of a relative
- Transfers that have taken place between common tenants, joint tenants, and related arrangements of co-ownership
- Transfer of property among spouses
Is a transfer disclosure statement important?
It is a necessity for sellers to give their buyers with a transfer disclosure statement not only because the same has vital information about the property, but also because the law says so. The document is not only mandatory for the seller to produce, but also for the buyer to procure from the seller just before they both shake hands and close the deal.
In case of buyers, if the seller fails to produce transfer disclosure statement during this period, and hands over the document after finalizing the deal, you, as a buyer, have every right to back out from the deal.
The law protects your interests in this matter as you will be handed over the deposits (if any) you have submitted to the seller as a token of security. That being said, it is clear that the transfer disclosure statement is a very important piece of official document in the real estate sector.
Word to the wise – In case you are associated with transactions related to real estate, it is best to conduct thorough visual inspections of the property that has caught your attention. Be sure you are documenting every single issue with the property that has been disclosed in the transfer disclosure statement. It is one of the many ways you can protect yourself from unnecessary legal expenses in the future in case of a mishap and keep your investments protected.
It should be kept in mind that corporate property buyers who buy foreclosed and old properties, flip the same and sell them in the market should also give their buyers with a transfer disclosure statement.
In case your seller is exempt of providing a transfer disclosure statement for the property, be sure you seek the assistance of a professional property inspector so that they can document any issues with the property that can possibly bring down its net worth or marketability factor.