We have a good number of Alabama real estate companies utilizing seller disclosure in their listing procedures and practice on sales of existing homes. This is causing some confusion and problems, especially at closings. I am going to talk about this, but first we need to get refreshed on the basics of seller disclosure. This will be fairly painless. You will not even have to deal with any legal citations, because there is no law on point to cite.

Let's first have a clear understanding about what is meant by seller disclosure practice. Some brokers have decided that they should require owners of existing homes listing with their companies to complete a seller disclosure form. The use of a seller disclosure form is mandated by law on sales of existing homes in many states. Alabama has no law requiring use of a seller disclosure form. The form itself is usually very detailed, covering every physical aspect of a property. The seller is asked to reveal any defects or problems known about the property on this form. The broker then shares this information with potential buyers, so the buyers will know what the seller knows about the condition of the property. These disclosures are also commonly known as property condition disclosures. A property inspection is still recommended to the buyer.

There are many factors a broker has to consider in deciding on seller disclosure practice. These considerations raise issues that are mostly beyond the scope of the license law, so I will not comment upon them. For the most part brokers choosing seller disclosure view it as a risk management tool. We have even gotten reports that some errors and omissions insurance carriers are strongly encouraging the use of seller disclosure forms.

This gets us back to the point. Here is the problem: Some Alabama real estate licensees believe that seller disclosure is required by law in Alabama. Some have reportedly disrupted closings by demanding that the listing agency representative produce a copy of the seller disclosure form. When this non-existent form is not produced the situation gets worse. The offending agents proceed to upset the consumers, buyers and sellers, by saying that the form is required by law, and that all manner of evil is going to rain down, if the form is not produced. The truth really is the offending agents believe that this form, missing from their files, will cause them not to be paid their commissions. The truth further seems to be that perhaps the brokers of these agents mistakenly believe that seller disclosure is the law in Alabama. Now, I am all for everybody having their files in order. I even like to see everybody paid, however, disrupting closings in front of consumers while misstating the law.  I cannot go with that. Let us see if we can do better.

Again, it should be noted that the information presented in the preceding article relates ONLY to people buying & selling houses in the state of ALABAMA and their agents.