As a Nevada citizen, you may be all too aware of gambling, games, winning, and losing. Do you bet it all on black or red?
Although, as a home seller, you want don't want any risk, liability, or losses when selling your home. Buyers also feel the same exact way as you. One way to minimize any risks or surprises during the home sale or purchase is a Nevada Law that requires you first give a buyer a full and honest disclosure about the home, within 5 days of going under contract.
This disclosure is intended to make the buyer aware of any and all defects or issues with the home, that materially affect the value or use of the home in an adverse manner (NRS 113.100). Defects might include something as small as a broken sliding glass door roller, or as big as mold, air conditioning issues, or roof leaks.
Disclosure Laws in Nevada for Home Sales
N.R.S. 113.130 broadly covers disclosure requirements for home sellers in Nevada. The statute NRS 113.130 requires that at least ten days before the residential property is conveyed to the buyer, the seller must complete a disclosure form covering all known defects materially affecting the value or use of the property in an adverse manner.
After the buyer gets the disclosure statement, the buyer can rescind /cancel the purchase. Imagine, for example, you give the buyer a disclosure statement stating the heating system doesn't work. The buyer can back out of the transaction, or alternatively negotiate for a change in terms; perhaps a lowering of your purchase price in order to recover the cost of the broken heating system. Alternatively, the buyer can ask for an agreement from you, saying you will make repairs before the closing. Or, the buyer can simply stick your disclosure statement in a drawer and move ahead with the sale, as some have been known to do.
Finally, if you the Seller discover any new defects after giving the disclosure form to the buyer but before the actual closing, you must tell the purchaser or his or her real estate agent about it, in writing, as soon as practicable (and before closing the sale). This means that if you the Buyer have an inspection done, and an adverse issue is found on the inspection report which was not disclosed because it was unknown previously, and you the buyer decide to back out of the transaction because it is too concerning for you to take on, the Seller must revise the Disclosure (SRPD) and add any and all defects that materially affect the home in an adverse manner from the inspection report for any new buyers after you.
Important to note though, Nevada law specifically "does not require a seller to disclose a defect in residential property of which the seller is not aware." In other words, you the seller have no obligation to hire an inspector to tell you whether your plumbing works or not. If you do not know about a particular problem, you have nothing that needs to be disclosed.
What Is Covered By Nevada's Disclosure Statement?
The Nevada Real Estate Division (a state agency that monitors the real estate industry) offers a widely used multi-page disclosure form containing all of the necessary information that you should disclose to a potential buyer.
The form asks you to answer a series of questions about various elements of your home by checking a box for "Yes," "No," or in some cases, "N/A" (not applicable). The disclosure asks about the condition of various categories of aspects of your property, including systems and appliances (such as plumbing, and garbage disposal), property conditions (roof, renovations, flooding, and so on), and environmental hazards and conditions (such as radon, asbestos, lead, meth production, and fungi), and more.
Remember, the form is asking you whether you are "aware" of any conditions affecting the specified area. If you are not aware, simply check "No." If you are aware, you can check "Yes" and offer an explanation on the final page (or attach additional pages of explanation).
You'll notice that the form asks various miscellaneous questions, particularly about the legal aspects of the home. Is the property the subject of any lawsuits? Are there any unpaid contractors who have done work on the property? Are there any homeowners' associations or Nevada common interest communities with governing authority over the area? These are questions that a buyer would like to have answers to and legally if these issues exist they need to be addressed through closing.
There are no questions that allow you to remain silent about a defect, there's a catchall question regarding "Any other conditions or aspects of the property which materially affect its value or use in an adverse manner." You should want to answer this entire form honestly and with as much transparency as possible.
Why Should You Be Honest and Open in Making Disclosures?
You may be wondering, why I should disclose this? And why would I say something that will lower my return possibly? There are several important reasons for openness and honesty. First, Nevada law requires you to do so. Second, it gives the buyer the ability to see the home for its real condition and make a fair decision to purchase or not.
Third, when a buyer feels you aren't hiding problems, they are more likely to be cooperative in negotiations leading up to the closing. Also, a buyer who learns of problems with the house upfront, might not negotiate as hard for price reductions or repairs if he or she realizes that your price already took the problems into account and you adequately disclosed such.
Finally, disclosing a defect in your home will help defend you from legal liability down the line. Imagine that you sell your condo to a buyer knowing the interior bathroom walls contain an outbreak of mold, but you decide not to disclose it and hide it. If the buyer closes on your property without having discovered the mold, moves in, and then (inevitably) finds it, he or she might decide to sue you for breach of contract or fraud in order to cover the costs of remediation.
However, if you had disclosed the mold, the statute would prevent the buyer from recovering; the buyer would have accepted the property with the defect as revealed by the seller "without further recourse."
Simply put, honesty is the best policy for negotiating a fair deal that won't result in lawsuits or frustration down the line.
