New Jersey Real Estate Salesperson · Property Condition and Disclosures
Seller Disclosures and Inspections
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In 30 seconds
Most states require sellers of residential property to complete a written disclosure of known conditions, and buyers protect themselves further through due diligence, usually an inspection contingency in the contract. The tested distinction is that a seller disclosure is a statement of knowledge, not a warranty, and it never replaces the buyer's own inspection.
Why this matters
Exam questions test whether you know that a seller's disclosure form tells the buyer what the seller knows, while an inspection tells the buyer what is actually there.
The college version
In normal terms
- A seller disclosure form is the seller's written, signed statement of known defects and conditions; the seller answers from personal knowledge and is not promising the house is perfect.
- Buyer due diligence means the buyer investigates before being locked in, typically through a professional inspection ordered under an inspection contingency (see Topic 07).
- The licensee's separate duty to disclose known material adverse facts (see Topic 06) still applies even when a seller form exists.
Concepts in this outline
- Seller disclosures — a seller's written, signed statement of known property conditions and defects, required in many states; a statement of knowledge, not a warranty, and never a substitute for inspection.
- Buyer due diligence and inspection contingencies — the buyer's own investigation, chiefly a professional inspection made possible by a contract contingency allowing repair requests, credits, or cancellation (see Topic 07).
Eli explains
The same idea, in plain words
Explain it like I’m 10
Buying a house involves two kinds of knowing. The first is what the seller knows. Many states require a seller disclosure form, a signed checklist on which the seller reports known problems: roof leaks, past flooding, a furnace that quits. The form is a statement of knowledge, not a guarantee; if the seller truly does not know the sewer line is cracked, the form will not say so. New Jersey's treatment of the form is covered with the state rules (see Topic 19).
The second kind is what the buyer finds out. Buyer due diligence is the buyer's own homework: reading the disclosure, checking records, and above all hiring a licensed home inspector. Buyers usually sign first under an inspection contingency, a clause that lets them inspect and then negotiate repairs, a credit, or a walk-away (see Topic 07).
The licensee sits between the two: ensuring the seller answers truthfully, never filling in answers for the seller, delivering the form to buyers, urging every buyer to inspect, and still disclosing any known material adverse fact (see Topic 06).
Worked example
Priya and Tom sign a contract on a Montclair Victorian. The sellers, the Lindqvists, completed a seller disclosure form noting a repaired chimney and no known water problems. Their salesperson, Rosa, urged them to answer every line themselves and refused to "help" by guessing at the age of the roof. Priya and Tom's contract includes an inspection contingency, and their inspector finds knob-and-tube wiring in the attic, something the Lindqvists honestly never knew about. Because the discovery came from the buyers' own due diligence, the two sides negotiate a credit toward rewiring and close on schedule. The disclosure told the buyers what the sellers knew; the inspection told them what was actually there.
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