A real estate non-disclosure agreement is a legal tool that’s commonly used in real estate...
A real estate purchase is typically one of the biggest transactions in your life, and before you sell, or buy, a property you should be familiar with the disclosure requirements for selling real estate in Nevada. These disclosure requirements protect the buyer from buying a home with an unknown defect that may affect the value or usability of the property.
At the same time, they protect the seller from future litigation, should the property turn out to have a defect that the buyer should have been aware of. While you can’t be held legally responsible for a defect of which you are unaware, you can be, if you fail to disclose a defect that you are aware of.
Real Estate Disclosure Laws in Nevada
Real Estate disclosure laws in Nevada are intended to protect both seller and buyer in a real estate transaction. As such, they are written in a broad manner, but the Nevada Real Estate Division provides a checklist that is easy to fill out. This disclosure statement is required, by law, to be filled out by the seller, and signed by both seller and buyer.
Your real estate agent may offer you assistance and knowledge about how the form needs to be filled out, but they are not allowed to fill it out for you. It is rather difficult to sue a real estate agent for misrepresentation in the state, and because of this, the real estate agent is restricted from filling out disclosure forms for real estate transactions.
As the seller, you will be required to disclose any known defects that exist at the time of the transaction, as long as they fit within certain categories. You are not required to have the home inspected prior to sale in order to locate defects. The buyer, however, is very likely to do so. The defects on the disclosure form will generally be items that will affect the value or usability of the property in question. They will be items that could cause a buyer to determine not to go forward with the transaction, or perhaps to negotiate a price adjustment to account for repair costs.
On the other side of the equation, though, if you’ve honestly and promptly disclosed any defects that you’re aware of, it could be argued that the price of the property has been set after taking those defects into account. The buyer may choose to move forward anyway, even if they still have the home inspected to look for other defects, unknown to you at the time of disclosure.
The seller will be required to provide the Seller’s Real Property Form at least 10 days prior to closing the transaction. This gives the buyer an opportunity to investigate and respond, whether that means backing out of the transaction, asking for an adjusted sales price, or simply filing the disclosure form and moving on.
Deciding What to Disclose
Each real estate transaction should have its own contract, rather than using a standard boilerplate document for such an important purpose. Having an experienced real estate lawyer draft your contract will help you to ensure that your interests are being protected appropriately. This advice applies to both buyer and seller in any transaction. The attorney is going to be your advocate to ensure not only a smooth transaction now, but protection later should one of the parties breach the contract, or if there are potential inconsistencies in the disclosure.
If you’re the seller, while having your attorney draft the real estate sales contract for this transaction, ask them about what items need to be disclosed. You should also ask about any defects that should be disclosed, even though it isn’t required, and what items you can leave off the disclosure form altogether. Every transaction is unique, just as every property is unique, so the items needing disclosure will vary depending on your individual circumstances. Your real estate lawyer will be the most qualified person to answer these questions.
Stigmatized properties are one major area where disclosure requirements are questioned. A stigmatized property is one where a property has been psychologically impacted by an event that occurred, or was believed to have occurred, which has no physical impact on the property.
In Nevada, sellers are not typically required to disclose events such as murders, suicides, deaths, paranormal activity, or criminal activity at a property, unless the property itself was the cause of the death. Real estate agents are not required to disclose these issues, either, but will be obligated by their duties as a licensed agent to answer truthfully, if asked whether the property has such history.
What Needs to Be Disclosed?
Some items are required to be disclosed by Nevada law, assuming the seller is aware of them. These include items such as:
- Foundation Issues
- Electrical/Plumbing/HVAC Issues
- Toxic Conditions
- Pest Issues
- Safety Issues
Any type of foundation problem, like cracks, heaving, or displacement are required to be disclosed prior to the sale of the home. These issues have the potential to be very costly to repair, and to affect the usability of the property prior to, and during, the time when repairs are being made. Foundation issues, can also lead to other times of the house needing to be addressed after repairs are made.
Leaks, whether roof leaks, or a faulty or broken pipe in the ceiling, are a required disclosure item. Water intrusion has the real potential of causing escalating damage and, if not properly addressed, can provide a favorable environment for mold growth.
Interior mechanical systems can be both costly to repair, and greatly affect quality of life, or even be dangerous if they are faulty. For this reason, all electrical, plumbing, or HVAC system defects will need to be disclosed.
Whether it is improper bonding of a gas pipe, improper connection of the grounding lug in the breaker panel, or an inoperable or missing GFCI circuit, all electrical defects will need to be disclosed. Something small, but potentially dangerous, like using standard PVC pipe between the water heater and the outlet, can cause major health problems to the user.
Plumbing issues such as a faulty water heater, a currently leaking pipe, or a previous repair that didn’t remediate moisture intrusion are all plumbing items that will need to be disclosed.
HVAC system issues, or items known to be in need of repair, will also need to be disclosed. These repairs tend to be costly, and the buyer should be made aware of them prior to closing on the transaction. In addition, some HVAC issues have been known to create a moisture collection problem, which can contribute to mold growth.
Any sort of toxic conditions will need to be disclosed prior to completion of the transaction. These will include the existence of mold, caused by either external leaks, defective piping, or other unknown reasons. Asbestos and Radon are also items that will need to be disclosed during this process.
Any sort of pest infestation, such as termites or rodents, will need to be disclosed per Nevada Law. Failure to do so would place the seller in violation of state disclosure requirements. Termite infestation, may not be immediately apparent, though rodents typically are easier to notice.
Safety Issues are required to be disclosed prior to closing on the real estate transaction, for fairly obvious reasons. These issues can include things like faulty stairs, handrails, and loose or missing spindles.
These items are not the only required disclosures included, they are simply a list of some of the types of defects that you’ll be expected to disclose, prior to sale, if you are aware of them. Remember, you are not required to hire an inspector to find these items in advance, only to include them on the disclosure. Be aware, however, that the buyer will most likely hire a professional inspector who will be looking for these issues, in addition to others.
You, as the seller, will be responsible for accurately filling out the disclosure documents yourself, as your licensed real estate agent isn’t allowed to do so. In fact, filling out these forms for you is one of the few ways they can be held accountable for nondisclosure under the new laws.
An experienced real estate attorney will be an invaluable asset to have on your team for this process. Not only will they be qualified to advise you on what does, or doesn’t, need to be included in your disclosures, they will be able to help you with other aspects of the process as well. For example, a real estate attorney can ensure that your contract contains language that protects your rights both during, and after, the real estate transaction, and since they are already familiar with the property and transaction, will be better able to help if there are legal issues regarding this property in the future.