Selling a Delaware Home: What Are My Disclosure Obligations?

Before selling your home in Delaware, you probably know that you will need or want to interview real estate agents and sign up with one to list the property, clean, declutter, and paint, hold open houses and other showings, meet with potential buyers, and ultimately negotiate your sale.

However, don't gloss over an important legal obligation, created by Delaware's legislature: Under the Buyer Property Protection Act, sellers of residential property must make certain disclosures to prospective purchasers about known physical and other defects on the property. Waiting until the last minute to complete this task risks creating an incomplete disclosure set, which could result in angry buyers or even a later lawsuit.

If preparing to sell your Delaware home, what exactly must you disclose, and how?

Real Estate Disclosure Law in Delaware

The Buyer Property Protection Act, codified as Chapter 25, Title 6 of the Delaware Code, requires the seller of residential real estate to complete a form—known as the Seller's Disclosure of Real Property Condition Report—setting forth any known conditions and significant defects with the property. You will need to sign this form, as will the buyer, to acknowledge receipt.

Specifically, the Delaware statute says that sellers transferring residential real property must "disclose, in writing, to the buyer, agent and subagent, as applicable, all material defects of that property that are known at the time the property is offered for sale or that are known prior to the time of final settlement."

The law also requires home sellers to provide the buyer with any information they have on radon within the house based on tests or inspections, and notify the buyer of any known radon hazards.

The purpose of Delaware's statute is to compel you to detail any facts of which you are aware that negatively affect the value or desirability of the property. This could cover a wide variety of issues, ranging from a roof that's missing shingles to a leaky gas tank. The legislature's broader goal, of course, is to prevent the buyer from having any nasty surprises after moving into the home.

The Delaware Real Estate Commission provides a multi-page form containing all of the necessary questions for you to answer. You are required to provide written copies of this form to potential buyers, and update the information if it changes prior to the sale.

Who Is Exempt From Filling Out a Delaware Property Disclosure Form?

What Issues or Defects Does the Delaware Disclosure Cover?

Delaware's disclosure form is somewhat unique in its breadth and depth. While some states merely ask sellers to disclose any defects with respect to a few major elements of the property (often with an "other" clause), Delaware's form is divided into 15 broad categories with nearly 150 total questions.

These broad categories capture many of the details about which a buyer would be curious. For example, in the first category, "Occupancy," you're asked things like whether you currently occupy the property full-time or whether you lease it out.

In the category for "Structural Items," you're asked things like whether there are any known problems with the home's foundation and whether there has been any construction on that foundation. In the category for "Heating and Air Conditioning," you're asked what type of energy is used in the house, how old the furnace is, and more.

You are then asked whether some 40 different home appliances—from the refrigerator to the smoke detectors—are in "working order."

Some of these questions might seem more important than others, but you must still answer all of them to the best of your knowledge. In addition, you may make comments in a section for "Additional Information." This offers you a way to explain any issues, particularly if checking "yes" or "no" doesn't tell the whole story. For example, there's a question in the "Termites, Dry Rot, Pests" section of the form asking whether there have ever been any termite or other wood-destroying insect infestations on the property. If you merely check "Yes," this could alarm the buyer. But if your later comment clarifies that there was a small issue many years ago, which you remedied by bringing in a professional and which has not recurred, the buyer would likely be put at ease.

Federal Law Also Requires Disclosing Lead Hazards in Older Homes

If your house was built before 1978, it's likely to contain some source of lead, such as lead-based paint or lead pipes, The federal Residential Lead Based Paint Hazard Reduction Act of 1992 (42 U.S. Code § 4852d), commonly referred to as Title X (Ten), requires you to provide buyers with information on these hazards, and give them a chance to inspect further. For details, see Seller Responsibility to Disclose Lead-Based Paint Hazards.

Why Should You Be Honest In Making Disclosures?

Let's say you have a nice home in Wilmington which you want to sell quickly. Upon first glance, this lengthy disclosure might seem like a significant burden. Why would your elected representatives in Dover force you to ‘lead with your chin' and highlight bad qualities of the property to buyers?

There is no disputing that your disclosures could scare away some buyers, or result in a lower purchase price. Some buyers might not be interested in purchasing a home that will need repairs. But what should also be taken into account is that honesty and openness in the negotiations leading up to the sale will increase buyer confidence.

What's more, if you disclose a known defect now, the purchaser cannot turn around months after the transaction has closed and sue you for fraud, misrepresentation, or breach of contract. After all, the form gave full notice of the defect before the person bought the property.

Imagine that you know that there is mold in the basement bathroom, and so you answer "Yes" to the relevant question on the form. A buyer who purchases the house regardless, then tries to sue you for the cost to remedy the mold, will be unsuccessful. As Delaware's disclosure law says, "The buyer shall not have a cause of action against the seller, agent and/or subagent for… Material defects in condition of the residential real property disclosed to the buyer prior to the buyer making an offer to purchase." The disclosure form insulates you from this sort of liability, which could otherwise cause legal fees and headaches long after you wish you could move on.