Learn about Contract Disclosure Statement and the Buyer’s Right of Cancellation

A contract disclosure statement or a seller property disclosure is a prerequisite in a standard real estate contract. This is a form that is required to be signed only by the seller. The realtor or the property management agency are not authorized to sign a contract disclosure statement on the behalf of the seller. This contract disclosure statement requires the selling party of a residential real estate to reveal each and every known defects and latent flaws in the property that are in the best knowledge of the seller. Latent flaws are considered to be the physical defects that the buying party might not considerably anticipated to discover or detect even with a diligent visual inspection of the real estate. In addition to that the contract disclosure statement also enforce selling party to reveal any flaws in their real estate that could consequently inflict a risk related to the health and safety of the buying party along with the people who may visit them. The contract disclosure statement is required to be delivered to the buying party at the time of the signing of the real estate contract.

In Virginia, the selling party is required to utilize the form developed by the Virginia Real Estate Board for the contract disclosure statement. While signing a contract disclosure statement, the selling party is obliged to reveal each and every known flaw of the property, which are in the actual knowledge of the seller and any other external factor causing the damage to the physical state of the property. A contract disclosure statement, signed by the seller must be provided to the buyer before the signing of the real estate contract. If a seller fails to do so, then the buyer would have the right of cancellation. The buying party would be provided with the time of three days after receipt to decide if they want to use their right of cancellation of the real estate contract. This right of cancellation would be revoked if the buying party takes the possession of the property, applies a mortgage or settles.

In an event of a real estate transaction where the property is sold in the “as it is” condition, than a seller is obliged to deliver a disclaimer statement that no inspection of the property is required. By submitting this disclaimer a seller would not be allowed to camouflage any underlying flaw that would not be possibly revealed in the inspection of the property. However, the selling party would not hold any liability for any oversights or miscalculations, which are not in their actual knowledge. At the time of settlement, the disclaimer statement must be modified to include if a change is applicable or verify that the property is in the exact state as when the contract disclosure statement was signed. The buying party could withdraw from their right to a contract disclosure statement. Along with the right of cancellation, Virginia also provides the buyer with the right to sue the seller for any damages caused because of misrepresentation in contract disclosure statement up to one year of settlement.

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