Things That Home Sellers Legally (and Ethnically) Should Disclose

Most of us were raised to be honest, because as mom and dad have always affirmed tous, “Honesty is the best policy”. The majority of us have been raised with this belief drilled in to our heads, that to be ethnical human beings, we should always be honest to ourselves and our neighbours. However, many of us lose sight of this basic mantra as we flow from children in to our adult and work lives. We get carried away by ambition, goals and meeting our career quotas -and sadly, honesty becomes a distant memory. 


A large part of being a good person is being honest, and acting with integrity -both in our personal lives and in our work lives. Similarly, a huge part of being a good real estate agent has to do with honesty and integrity as well. As buyers, sellers and renters in the real estate field, we expect honesty. The question is, do we always get honesty?


Sometimes it’s difficult to tell the truth when numbers and dollars signs are flashing like the tempting lure of the Las Vegas Strip. It may be sometimes difficult to tell the truth, but if you want to be a successful and reputable player in the business, it’s a necessary part of the job. What comes around does indeed come around. So what are some truths that agents and sellers should ethically be honest about when it comes to unloading a property on the market?


    •       The truth about the sales price

    •       The truth about the property’s real condition

    •       The truth about the background and history of the property

    •       The truth about the credit history and worthiness of the client

    •       The truth about the style and layout of the property

The list goes on and is not limited to just the above. Have you ever had buyers’ remorse from purchasing something of significant value? Maybe you had moved in to a home that was sold to you with the appearance of being “perfect” and in mint condition on the surface, but only to find out weeks in to your residence that bits and pieces of the home started to break down. Cracks start to show through the seemingly perfect exterior, and the real face of the property starts to rear its ugly face. Ionce had a friend who bought a second hand baby stroller from another mom on a Facebook forum. The pictures uploaded online presented the baby stroller to be practically brand new. There were no wear and tears, and the seller explicitly stated that the stroller had only been used “a couple of times”. The price was second hand price and it seemed like the deal of all deals. Of course, my friend jumped at the chance, met with the seller for the physical transaction.Everything seemed normal, the seller graciously showed the buyer how to operate her new baby stroller, both parties bid adieu cheerfully, and they were off. My friend was overjoyed with the stroller at its steal price, but a week in to it,there came an accident. While her infant was in the stroller as mom and child ambled through a park, the stroller made a strange clicking sound and suddenly collapsed into itself - causing the baby to wail out in pain and sending shock waves through the mom. What had just happened? No long term damage was done to the child, but the mother was confused, terrified and filled with rage.She immediately called the seller and notified her of the incident, at which time, the seller hesitantly and sheepishly replied to her that there “may” have been a defect with the stroller but she had not used it in some time before selling it to the new mom, so she thought the defect had fixed itself! The seller had known all along that there was a defect with the stroller, but she with held the information, in hopes that 1.) The defect had miraculously healed itself,and 2.) She would be able to unload the defected product on to a new owner,hence leaving her own hands clean. 


Ethical practice? Most of us would disagree to the seller’s behaviour and passionately disapprove. I mean, what if the same scenario were to play out in our own lives? The incident above is not unique, nor is it new,but it is something that happens more often that we’d like to believe. This incident involved a HKD $800 stroller and an (thankfully)unharmed baby, but imagine this same setting to play out with a property investment! What is one to do when so much is on the line?


This is a question and fear that plagues many residential sales. As a seller, what are you obligated to disclose about your home? Even if you are not legally obligated to reveal certain features, should you still and under what circumstances should you be (hand to bible) completely honest? The general consensus is that if you need to question whether or not you should disclose something, chances are you probably should because the harm in not disclosing information can land you in some serious legal and financial woes. 


Whether you are a buyer or a seller, disclosures are a key part of your real estate negotiation and transaction. 


First let’s discuss what a disclosure is in real estate terms. Disclosure statements (can come in a variety of forms), are the buyer’s opportunity to learn as much as they can about the property in question and the seller’s experience and history in it. Disclosure information can range from know ledge of bursted pipes and drainage systems, to paranormal activity, to information about a major construction or development project in the proximity. Disclosures serve to inform buyers properly of what they are getting themselves into, and also to protect he sellers from future legal action and responsibilities. It is the one proper chance for the seller to reveal anything that can negatively impact and affect the property’s value and the buyer’s feelings about it. 


If you are still confused, we have compiled a list of what you (ethnically and legally) should include in your sellers’ disclosure:

Historical background and/or paranormal activity

Ghost hauntings? That’s an immediate negative! Some people are more spiritual and superstitious than others and truly believe in the supernatural. Any disclosure regarding a property’s paranormal behaviour is an automatic red flag and deal-breaker. It’s no wonder that some sellers will purposely withhold and/or downplay this kind of information. Paranormal activity may seem like child’s play or just plain silliness for some, but for others, it is a very real and authentic phenomenon If you know of any eerie history or ghostly happenings in your home, you should absolutely disclose the information to the buyer’s side. It is up to the buyer’s side how they wish to move forward with this information in hand. The most important thing is that you have done your duty in being straight up with the truth. In some places around the world,sellers are under legal obligation to disclose all known material facts about a home, which under different contexts could potentially include or exclude ghost hauntings and paranormal activity. While you may not believe in hauntings and think it’s silly, your buyer may not. There is no disclosure that’s too silly, or not important to be made aware of. 


What about if the property you are selling has had a known past? Perhaps a murder,suicide or other violent crime has taken place there? If you live in Hong Kong,you must have heard about the frightening cold-blooded murder case that occurred at J Residence in Wanchai. Knowing such information, would you as a buyer want to purchase this property? Such defects can scar a property’s value tremendously, but you still need to disclose such information upon the sale of a home. 


Pests,rodents and creepy crawlies

Unless you consciously choose to live in the wilderness, most buyers will not expect to move in to a home that is being welcomed by mice, rats, snakes, cockroaches,and bugs. This is not a friendly welcome. It is a serious pest infestation, a major issue that will not be met with kindness by most sane buyers. If you know that the property you are selling as any sort of pest infestation or has been subjected to it in the past, you should ethnically disclose this fact. Some people say, “Oh, we live in Hong Kong! There are cockroaches and bugs everywhere!” While is may not be legally required of you to disclose information about pest infestation, it’s a safe and smart move to tell any serious potential buyers of the fact, rather than letting them find out for themselves. Buyers will mark you as dishonest and untrustworthy. Even if you do successfully unload this property by being dishonest, your dishonest could cost you in the long run. In the real estate world, word of mouth is a pervasive method of doing business. If you don’t have good word of mouth, your business and your name will quickly become tarnished and even go up in flames.


Property infrastructure issues

So the ceiling cracks and water drips from the pipes? The sink floods every time you use it? The property is completely not soundproof from your neighbours’ units? The sewage smells have infiltrated the property? This are all serious issues in any home transaction. You don’t want to play your would-be buyers for a fool. Sure, they may not figure out these issues during the home viewings and walk-throughs, but the truth always comes out eventually. It is always the best policy to disclose any major or unusual issues about the property - even if the issue has not happened for a while or you think that it has been fixed. These types of things can manifest in to serious lawsuits against the seller and the listing agent and real estate company involved in the transaction. It is best to be completely and utterly transparent!


Neighbourhood issues and concerns

It might not seem like a big deal that your next-door neighbour’s home was recently broken in to. Or maybe the entire neighbourhood has been a high target for break-ins in the recent months. Even if your home had not been a victim thus far, it can very well affect the new owner sometime down the line. While neighbourhood issues may seem insignificant to you, it could become a major issue if you don’t let potential buyers know the facts. 


One of the most asked questions during home viewings is, “How safe is this neighbourhood?”Safety matters! Safety is a topmost concern for everyone, especially when children are involved. When homes change hands, it’s also wise to disclose any sort of neighbourhood issues and concerns upfront. 


Putting your house on the market involves specific written information to buyers about the property’s information. As a party in a real estate transaction, what do YOU believe are your disclosure obligations? Real estate laws can be complicated and will vary from location to location, which is why it’s best to have an experienced team of consuls to help. If you have a specific question about disclosure requirements,or find yourself in a situation where you are not sure of what to do, our team at Engel & Voelkers can happily consult with you of the local restate laws. 

Hong Kong - disclosure1.jpg

Engel & Völkers

Hong Kong, Real Estate Agency
Shop A, Ground Floor, 95 Caine Road, Mid Levels
- Hong Kong
Company License: C-035745
+852 2561 3616

To the shop

Offer A Property

Yes, I would like to have my property valued by Engel & Völkers free of charge and with no obligation.

    [EUNDV] => Array
            [67d842e2b887a402186a2820b1713d693dd854a5_csrf_offer-form] => MTM5MjE5NzU3NkJ4d29xancwTDVhZWFIRzEycXAxcW9SdElHdVBqMTdV
            [67d842e2b887a402186a2820b1713d693dd854a5_csrf_contact-form] => MTM5MjE5NzU3NnlHcUR0Y2VlTXVPUndLMHZkMW9zMnRmRlgxaUcwaFVG