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Property Disclosure Statement Guide: What Landlords, Tenants, and Investors Need to Know

Learn everything about property disclosure statements, including legal requirements for sellers, what tenants should know when their rental is being sold, and how investors can protect themselves during transactions.

Introduction

A Property Disclosure Statement is a legally significant document that requires property sellers to reveal known material defects and issues with a property. Whether you're a tenant whose rental home is being sold, a landlord selling your rental property, or a real estate investor managing multiple properties, understanding disclosure requirements is crucial to protect your interests and avoid potential legal disputes. This guide explains what property disclosure statements entail, who needs to complete them, what must be disclosed, and how these documents affect different parties in real estate transactions.

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Key Things to Know

  1. 1

    Property disclosure requirements vary by state, so always check your local laws or consult with a real estate attorney to understand specific obligations in your area.

  2. 2

    Disclosure statements typically cover known issues only—sellers generally aren't required to hire inspectors to discover unknown problems.

  3. 3

    For landlords selling rental properties, tenant-reported maintenance issues should be included in your disclosures, even if you haven't personally verified them.

  4. 4

    Tenants' lease rights are generally protected when a rental property is sold; the new owner typically must honor existing lease terms.

  5. 5

    Real estate investors should maintain detailed property records and consider pre-listing inspections to facilitate accurate disclosures.

  6. 6

    Selling a property 'as-is' does not exempt sellers from disclosure requirements—you must still disclose known material defects.

  7. 7

    The consequences of inadequate disclosure can include lawsuits, monetary damages, rescission of the sale, and significant legal expenses.

  8. 8

    When in doubt about whether to disclose something, the safer legal approach is to include it in your disclosure statement.

Key decisions before you file

Before you file a Property Disclosure Statement in Arkansas, a few decisions shape the document: which option to choose and what each one means. The Property Disclosure Statement guide walks through them.

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Arkansas Requirements for Property Disclosure Statement

  • Arkansas Property Condition Disclosure Act (Arkansas Code § 18-12-801 et seq.)

    Requires sellers of residential real property consisting of one to four dwelling units to provide a written disclosure to buyers regarding the condition of the property, including known material defects.

  • Exemptions from Disclosure Requirements (Arkansas Code § 18-12-802)

    Outlines specific transactions exempt from disclosure requirements, such as court-ordered transfers, transfers between co-owners, or transfers to family members.

  • Timing of Disclosure (Arkansas Code § 18-12-803)

    Requires that the disclosure form be delivered to a buyer before acceptance of an offer to purchase, with the buyer having three days to rescind after receipt of the disclosure.

  • Disclosure Form Content Requirements (Arkansas Code § 18-12-804)

    Specifies the information that must be included in the disclosure form, including property condition, defects, and other material facts affecting the property's value.

  • Seller's Knowledge Standard (Arkansas Code § 18-12-805)

    Establishes that sellers are only required to disclose conditions and defects actually known to them, not those they should have known about through reasonable diligence.

  • Lead-Based Paint Disclosure (42 U.S.C. § 4852d; 40 CFR Part 745)

    Requires disclosure of known lead-based paint and lead-based paint hazards in housing built before 1978, including providing buyers with an EPA-approved information pamphlet.

  • Flood Zone Disclosure (42 U.S.C. § 4104a; National Flood Insurance Act)

    Requires disclosure if the property is located in a designated flood zone or if flood insurance is required by the lender.

  • Meth Lab Disclosure (Arkansas Code § 20-7-132)

    Requires disclosure if the property was used as a methamphetamine production site and has not been remediated according to state guidelines.

  • Death in Property Disclosure (Arkansas common law; Arkansas Code § 18-12-801)

    Arkansas law does not specifically require disclosure of deaths on the property, but material facts that might affect a buyer's decision should be disclosed.

  • Structural Defects Disclosure (Arkansas Code § 18-12-804)

    Requires disclosure of known structural defects, including foundation issues, roof problems, and other major structural components.

  • Water and Sewer System Disclosure (Arkansas Code § 18-12-804)

    Requires disclosure of the type, condition, and known defects of water supply and sewage disposal systems serving the property.

  • Environmental Hazards Disclosure (Arkansas Code § 18-12-804; CERCLA 42 U.S.C. § 9601 et seq.)

    Requires disclosure of known environmental hazards affecting the property, such as radon, asbestos, or toxic substances.

  • Homeowners Association Disclosure (Arkansas Code § 18-12-804)

    Requires disclosure of the property's inclusion in a homeowners association, including fees, restrictions, and governing documents.

  • Boundary Dispute Disclosure (Arkansas Code § 18-12-804)

    Requires disclosure of known boundary disputes or encroachments affecting the property.

  • Mechanical Systems Disclosure (Arkansas Code § 18-12-804)

    Requires disclosure of the condition and known defects of mechanical systems, including HVAC, electrical, and plumbing systems.

  • Material Defect Disclosure Obligation (Arkansas common law; Arkansas Code § 18-12-801)

    General obligation under Arkansas law to disclose all known material defects that could significantly affect the property's value or a buyer's decision to purchase.

  • Misrepresentation and Fraud Liability (Arkansas common law)

    Sellers may be liable for intentional misrepresentation, fraud, or concealment of known material defects not disclosed to buyers.

  • Stigmatized Property Disclosure (Arkansas common law)

    Arkansas law does not specifically require disclosure of stigmatizing events (such as crimes or paranormal claims) unless they materially affect the property's physical condition.

  • Military Airport Zone Disclosure (Arkansas Code § 14-56-426)

    Requires disclosure if the property is located within a military airport zone with potential noise or accident potential impacts.

  • Earthquake Zone Disclosure (Arkansas Code § 18-12-804)

    Properties in the New Madrid Seismic Zone may require disclosure of earthquake risks, particularly in northeastern Arkansas.

Frequently Asked Questions