Seller disclosures and the documents a sale needs

The paperwork is the part of selling that scares people off, and it should not. A home sale runs on a short list of standard documents and one principle that keeps you out of trouble: tell the buyer what you know.

The rule that protects you: disclose what you know

The lawsuits that hit for-sale-by-owner sellers almost always come from the same place. A problem the seller knew about and did not mention surfaces after closing, and the buyer argues they were misled. You avoid nearly all of that by disclosing.

If you know the basement takes water in a hard rain, write it down. If a previous repair was a patch and not a fix, say so. Disclosing a defect does not mean you have to repair it. It means the buyer decides with their eyes open, and you are not the one who hid it.

Your state’s property disclosure form

Most states require a written property condition disclosure, a standard form where you answer yes, no, or unknown about the roof, foundation, systems, water, pests, additions, and known hazards. Some states are stricter than others, and a few lean on buyer beware, but even those usually forbid actively concealing a defect. Our seller disclosure requirements by state table shows how each of the 50 states and DC treats this, with a link to the official form.

Your state guide tells you which form yours uses and where to get it. Fill it out honestly and completely. “Unknown” is a fair answer when it is true and a dangerous one when you actually know.

Special disclosures beyond the standard form

The standard property-condition form is the floor, not the ceiling. Some states require extra disclosures the form alone may not cover, and the disclose-what-you-know principle fills the gaps everywhere else.

The common add-ons:

• Prior flooding or flood-zone status. About 35 states now have some flood-risk or flood-history disclosure requirement, and hidden flood history is a frequent source of lawsuits (FEMA’s state flood-disclosure resource). If the basement has taken water or you have filed a flood claim, write it down even if your form has no flood question.
• A death on the property, which a few states require you to disclose. California, for example, requires disclosing a death on the property within the past three years. Rules vary, so this is one to confirm in your state guide rather than assume.
• Proximity notices such as Megan’s Law advisories, which some states fold into a natural-hazard or environmental disclosure report.

The fix is the same one that runs through this whole guide. Read your state guide for any add-on disclosure, and when a buyer asks a direct question, answer it honestly even if no form asks it.

The federal lead-paint rule

This one is national. For housing built before 1978, federal law requires the seller to do four things before the contract is signed: disclose any known lead-based paint and hazards, give the buyer the EPA pamphlet on protecting their family from lead, include a lead warning statement in the contract, and give the buyer a ten-day window to test for lead if they want one. You then keep the signed disclosure for three years.

If your home was built in 1978 or later, this rule does not apply to you. If it predates 1978, it does, with no exceptions for selling on your own.

A few details make the sequence concrete. The buyer’s ten-day window is the standard, but the parties can agree in writing to make it longer or shorter, and the buyer can waive it entirely if they do not want a lead test (EPA). If the buyer does want a lead inspection or risk assessment in that window, arranging and paying for it is their cost, not yours. After closing, you keep the signed disclosure for three years (EPA).

The reason this short checklist is worth getting exactly right is the penalty for skipping it. A seller who fails to give the required lead information can be sued by the buyer for triple the actual damages, and may face civil and criminal penalties (EPA).

The documents a sale actually needs

Beyond disclosures, a typical sale touches these. Your title or escrow company, or your attorney in some states, will tell you exactly which apply to you.

• The current deed and your title information
• Your mortgage payoff statement from your lender
• A recent survey or plat, if you have one
• HOA documents and a resale certificate, if there is an association
• Warranties and permits for major work like a roof, HVAC, or an addition
• Property tax and utility information for prorating at closing
• The purchase agreement itself, on your state’s standard form

Where the forms come from

You do not draft these yourself. State association forms, a real estate attorney, or your title company are the right sources for the disclosure and the purchase contract. Using the standard form for your state matters, because it is built so that nothing required gets left out. The closing and costs guide covers who runs the signing once these are in hand.

What it costs to do the paperwork right

The fear here is legal cost. The reality is more modest, and far smaller than the cost of getting it wrong. A few numbers to budget against:

• A real estate attorney typically charges a flat fee of about $500 to $1,500 for a straightforward residential closing, and can run over $2,000 if title or contract issues come up. In eight states the attorney is not optional: Connecticut, Delaware, Georgia, Massachusetts, New York, North Carolina, South Carolina, and West Virginia require an attorney to handle the closing. The exact figure varies by market, so treat this as a typical range, not a quote.
• A lead inspection or risk assessment, if a buyer of a pre-1978 home requests one in their ten-day window, is the buyer’s cost to arrange, not yours.
• The standard disclosure and purchase-agreement forms are usually low-cost or free from the form source, whether that is your state association, your attorney, or your title company.

A few hundred to low four figures buys you the correct forms and a clean transfer. That is far less than the cost of a dispute after closing, which is the outcome the spending is meant to prevent.

The tax side of selling: the home-sale exclusion

A common worry is owing a large tax bill on the profit. For most sellers of a main home, the answer is that you owe little or nothing, because of the federal home-sale exclusion. This is general information, not tax advice. Confirm your own situation with the IRS or a tax professional.

Under IRS rules, a single filer can exclude up to $250,000 of gain on a main home from income, and a married couple filing jointly can exclude up to $500,000 (IRS Topic No. 701). To qualify, you generally must pass the ownership-and-use test: you owned the home and kept it as your main residence for at least 24 of the 60 months ending on the closing date, and you generally have not used the exclusion on another home in the prior 2 years (IRS Topic No. 701).

If you fall short of the full two-year test, you may still qualify for a partial exclusion when the sale was primarily caused by a work-location change (a new job at least 50 miles farther away), a health reason, or an unforeseeable event such as divorce, death, or job loss (IRS Publication 523). Gain above your limit is taxable.

Sources used on this page

Every legal, tax, and process claim on this page traces to one of these. We re-check them on a schedule and date the page when anything changes.

1. Real Estate Disclosures about Potential Lead HazardsUS Environmental Protection Agency · epa.gov
2. Lead-Based Paint Disclosure Rule (Section 1018 of Title X)US Environmental Protection Agency · epa.gov
3. What if a seller or lessor fails to comply with these regulations? (treble damages; civil and criminal penalties)US Environmental Protection Agency · epa.gov
4. Topic No. 701, Sale of your home (capital gains exclusion, ownership and use test, 1099-S reporting)Internal Revenue Service · irs.gov
5. Publication 523, Selling Your Home (partial exclusion for work, health, or unforeseeable events)Internal Revenue Service · irs.gov
6. Instructions for Form 1099-S (who files; principal-residence written-assurance exemption)Internal Revenue Service · irs.gov
7. Flood Risk Disclosure: Model State Requirements for Disclosing Flood RiskFederal Emergency Management Agency · fema.gov

Common questions

My state is "buyer beware." Do I still have to disclose anything?

Usually yes, at least partly. Even in states that lean on buyer beware, you generally cannot actively hide or lie about a known defect, and the federal lead-paint rule applies everywhere. Check your state guide, and when unsure, disclose.

If I disclose a problem, do I have to fix it?

No. Disclosure and repair are different. You are telling the buyer what you know so they can decide. They may ask you to fix it, credit them, or accept it as is, but disclosing does not obligate you to repair.

What is a latent defect?

A problem that is not obvious on a normal look at the home and that you know about, like a basement that floods in heavy rain or a roof that leaks twice a year. These are exactly the things you must disclose.

Will I owe taxes on the profit when I sell my home?

Often no, up to a limit. Under IRS rules a single filer can exclude up to $250,000 of gain on a main home, and a married couple filing jointly up to $500,000, if you owned and lived in the home for at least 2 of the 5 years before the sale and generally did not use the exclusion on another home in the prior 2 years. Even partial relief can apply if a job move of 50 miles or more, a health reason, or an unforeseen event forced an early sale. Gain above your limit is taxable, and if the closing agent issues you a Form 1099-S you must report the sale on your return even when all of the gain is excludable. This is general information, not tax advice; confirm your situation with the IRS or a tax professional.

Does selling as-is mean I do not have to disclose anything?

No. An as-is clause means the buyer accepts the property in its current condition and you are not agreeing to make repairs. It does not waive your duty to disclose known material defects. Courts have held that hiding a known problem can still be fraud even in an as-is sale, because the clause protects you from unknown issues and from things a reasonable inspection would catch, not from things you knew and concealed. Fill out the disclosure form honestly regardless of an as-is sale.

Do I have to tell buyers my home has flooded?

In most of the country, yes, and disclosing is the safe choice everywhere. About 35 states now have some flood-risk or flood-history disclosure requirement, and prior flooding is widely treated as a material fact buyers can sue over if it was hidden. Even in a state with no specific flood rule, the disclose-what-you-know principle applies: if the basement has taken water or you have filed a flood claim, write it down. Your state guide covers the exact form and any flood-specific question it asks.

Who handles the IRS tax form for my sale, and what is a 1099-S?

Form 1099-S, Proceeds From Real Estate Transactions, reports the sale to the IRS. The settlement agent, closing attorney, or title or escrow company that closes your sale is normally the party responsible for filing it, not you. You can be exempt from having a 1099-S issued for a main home if your gain is within the $250,000 single or $500,000 joint exclusion and you sign a written certification that it was your main home, though the form may still be issued. If you receive one, report the sale on your return even if the gain is fully excludable.