What does the term "disclosure" refer to in real estate transactions?

In the context of real estate transactions, "disclosure" primarily refers to the obligation of parties, particularly sellers, to inform all relevant parties about material facts relating to the property. This encompasses any significant issues, defects, or special characteristics that could influence a buyer's decision or the value of the property. For instance, if a property has a history of flooding, the seller is legally required to disclose this fact to prospective buyers.

This practice is crucial because it promotes transparency and protects buyers from unexpected issues after the purchase. States often have specific laws outlining what must be disclosed, and failing to disclose known issues can lead to legal repercussions for the seller or agent. By ensuring that all parties are aware of these material facts, disclosure facilitates informed decision-making, enhances trust in the transaction process, and ultimately supports a fair real estate market.