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The SPDS And Why They Are Important To A Buyer . . . No We Are Not Talking About Potatoes

Sep 05

filed under: Buying A Home, Real Estate

So after tons of hours, days or months you have finally found that special property that you have contracted to purchase. Your ten day property inspection period is just about to start. Your Realtor® has now provided you with what is known in the real estate world as the “SPDS” from the seller of the property. SPDS is short for Sellers Property Disclosure Statement and you need to pay very close attention to what your Seller has disclosed in this six page document.

I am sure you are familiar with the real estate phrase “location, location, location”. Well as a Realtor® we advise our Sellers to “disclose, disclose, disclose”. Here’s what you need to know about the SPDS.

The Sellers Property Disclosure Statement is divided in to six general Sections.

  1. Ownership and Property asks for general information about the property, such as location, ownership and occupancy. Any seller, whether or not that seller has actually lived in the property, should be able to answer most, if not all, of the questions in this section.
  2. Building and Safety Information asks for information regarding the physical aspects of the property, such as past or present problems with the property and any work or improvements made to the property.  Has there been any current or past presence of termites or other wood destroying organisms on the property. How about any scorpions or other possible “pests”.
  3. Utilities whether the property currently receives the listed utilities and who the providers are. Any possible drinking water issues.
  4. Environmental information covers issues regarding environmental hazards, issues relating to soil settlement/expansion, drainage/grade or erosion, airport or traffic noise, odors, mold issues either past or present.  Have there been any conditions that are conducive to mold growth, such as past or present dampness/moisture, flooding, and water damage or water leaks of any kind.
  5. Sewer/Waste Water Treatment should reveal if the entire property is connected to a sewer and if so, where the sewer connection has been professionally verified. If the property is served by an on-site wastewater treatment facility, i.e., a septic or alternative wastewater system, a variety of additional information is required.
  6. Other Conditions and Factors – Additional information should disclose any other important information concerning the property that might affect your decision-making process, the value of the property,or its use, and to make neccessary explanations.

As you can see these issues and how the Seller has responded to any of the questions relating to these issues in his/her disclosure statement are extremely important to you. Having advance knowledge about the property you are purchasing not only makes you an informed buyer but the information provided in this document by your seller provides great reference material for you when you are doing your home inspection and your due diligence during the ten day inspection period.

Items of concern to you in the disclosure statement should be discussed with your home inspector so he can give closer attention to any of those items during his inspection.   Additional followup questions for the seller may also be necessary if you feel the Seller did not give enough information about a particular disclosure.  There could be some things that the seller disclosed that will require some further investigation on your part that may not be related to property inspection items. Some examples of this could be highway traffic noise, barking dogs, odors from a distant farm.

Bottom line, go over the SPDS closely with your Realtor®. It is not just another document for you to sign or initial. If for some reason you don’t receive a SPDS or receive one that is partially filled out because the seller states “I have never lived in the property and therefore have no knowledge about the property” I would advise you to be very cautious. Do your due diligence, hire a good property inspector. This is a big investment you are purchasing, it deserves your utmost attention.

Written by Howard Harris