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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 Wisconsin, 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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Wisconsin Requirements for Property Disclosure Statement

  • Wisconsin Real Estate Condition Report (Wis. Stat. § 709.03)

    Requires sellers to complete a Real Estate Condition Report disclosing defects they are aware of that would significantly reduce the property's value, limit the use of the property, or pose a health or safety risk to occupants.

  • Timing of Disclosure (Wis. Stat. § 709.02)

    Mandates that the seller must provide the Real Estate Condition Report to prospective buyers no later than 10 days after acceptance of a contract of sale or option contract.

  • Definition of Defect (Wis. Stat. § 709.01(2))

    Defines a 'defect' as a condition that would have a significant adverse effect on the value of the property, significantly impair the health or safety of future occupants, or significantly shorten or adversely affect the expected normal life of the premises.

  • Exemptions from Disclosure Requirements (Wis. Stat. § 709.01(2))

    Specifies certain transactions that are exempt from disclosure requirements, including transfers by court order, between spouses, and by a foreclosing lender.

  • Rescission Rights (Wis. Stat. § 709.05)

    Grants buyers the right to rescind a contract within 2 business days of receiving a disclosure statement or amendment to the statement.

  • Liability for Misrepresentation (Wis. Stat. § 709.06)

    Establishes that sellers are liable for misrepresentation or failure to disclose known defects in the property disclosure statement.

  • 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)

    Requires disclosure if the property is located in a flood zone or requires flood insurance under the National Flood Insurance Program.

  • Mold Disclosure (Wis. Admin. Code ATCP 134.04)

    Requires disclosure of known mold problems that present a health risk to occupants.

  • Radon Disclosure (Wis. Stat. § 709.03)

    Requires disclosure of known radon testing results and presence of radon in the property.

  • Well and Septic System Disclosure (Wis. Stat. § 709.03; Wis. Admin. Code NR 812)

    Requires disclosure of private well water quality issues and septic system defects.

  • Property in Historic District (Wis. Stat. § 709.03)

    Requires disclosure if the property is located in a historic district, which may limit renovation or modification options.

  • Methamphetamine Production Disclosure (Wis. Stat. § 709.03)

    Requires disclosure if the property was used for methamphetamine production, which can create hazardous residue.

  • Homeowners Association Disclosure (Wis. Stat. § 709.03)

    Requires disclosure of any homeowners association, condominium association, or other community association to which the property is subject, including fees and restrictions.

  • Property Tax Status (Wis. Stat. § 709.03)

    Requires disclosure of the current property tax status, including any special assessments or tax liens.

  • Boundary Dispute Disclosure (Wis. Stat. § 709.03)

    Requires disclosure of any known boundary disputes with neighboring properties.

  • Underground Storage Tank Disclosure (Wis. Stat. § 709.03; Wis. Admin. Code ATCP 93)

    Requires disclosure of known underground storage tanks on the property, which may pose environmental hazards.

  • Sex Offender Registry Information (Wis. Stat. § 709.03)

    While sellers are not required to disclose information about sex offenders in the area, they must not misrepresent if directly asked.

  • Material Adverse Facts Disclosure (Wis. Stat. § 452.133(1)(c))

    Real estate licensees must disclose to all parties in writing all material adverse facts that the licensee knows and that the party does not know or cannot discover through reasonably vigilant observation.

  • Airport Noise Disclosure (Wis. Stat. § 709.03)

    Requires disclosure if the property is affected by noise from a nearby airport.

Frequently Asked Questions