It's time to buy and at the magic moment there is an exchange of paperwork.

"Yes," say the buyers, "we want this house."

"Fine," say the owners, "here's our seller disclosure form written by our state government which requires that we tell you all we know about the property."

Should not the purchasers feel a wave of confidence at this moment? After all, the owners are providing a state-mandated disclosure form which surely covers every possible issue regarding the property's condition.

Right....

Let us assume that the owners in this instance are utterly honest people who want to assure that the buyers fully understand the property and it's condition. And so, as the sellers explain above, they have surely told all they know about the property.

And therein lies the problem. The owners are great people, totally honest, but they may not know too much -- or anything -- about the property, or at least anything about the stuff that counts.

You ask the owners: "Have you been in attic during the recent rain storms?"

They say, "huh."

To the best of their knowledge -- and these are entirely honest people -- the roof does not leak. But you have to wonder, how can they possibly know if the roof leaks if they have not been in the attic?

You look at the form prepared by your friendly and ever-helpful state government and you ask: Can anyone answer such questions?

My favorite question comes from Virginia.

"Are there any substances, materials, or environmental hazards (including but not limited to asbestos, radon gas, lead-based paint, underground storage tanks, or other contamination) on or affecting the property?"

One phrase which interests me is the one about conditions "on or affecting" the property. How are owners to determine if an underground storage tank is buried in a neighbor's yard. Is it okay to drill? Do you need the neighbor's permission? Is it okay to ask neighbors if basement radon accounts for those additional fingers? Can an owner be liable for not knowing what they cannot know?

And what about the expression "but not limited to." Is there any end to the possible liabilities represented by this phrase? For instance, is it the owner's responsibility to detect a spot of mold behind the built-in dishwasher? Must a home be disassembled before sale to check for deficiencies?

When mandated disclosure forms first began appearing a decade ago they were designed to protect three groups:

• Owners -- so there would be a written record showing that sellers had correctly disclosed information regarding the property's condition.

• Buyers -- so they would better understand the property they were purchasing.

• Brokers -- so they would have paperwork to demonstrate that property disclosures had been made. In other words, liability protection.

In theory, property disclosures are a great idea, but state-mandated forms may not ask the right questions, the questions may be literally unanswerable, and owners may be wholly unqualified to respond.

I am not among those who believe that buyer abuse should be a marketplace reality or that caveat emptor is a fair standard for real estate dealings. And yet it is fair to say that the marketplace has changed since state-written seller disclosure forms were introduced.

For instance, professional home inspections are both common and widely available. Buyer brokers are available nationwide. The use of limited home warranties is widespread.

I have grudgingly and with considerable reservation come to the conclusion that the time has come to dump mandated seller disclosure statements.

Why?

Seller disclosure statements provide assurance where none is earned. They are incomplete at best, misleading at worst. Most disturbingly, buyers may see them as a cheap way to avoid a home inspection.

In terms of reducing broker liability, seller disclosure forms serve merely as checklists for attorneys, paperwork that can be used against brokers even though brokers are not the authors of such documents.

I am aware that anything called "consumer protection" immediately and instantly has widespread support, but seller disclosure forms need to be re-thought because ultimately consumers will be better off turning to the new protections which have emerged in the marketplace.

For more articles by Peter G. Miller, please press here

Published: March 13, 2001

Use of this article without permission is a violation of federal copyright laws.

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .

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