✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.
As a seller in Michigan, you may have several questions and doubts in your journey on how to sell a house in Michigan. There are many factors involved from the moment you engage with a buyer until the closing process. Questions such as how does for sale by owner work in Michigan or whether opting for a real estate agent would be better? creates distress and confusion among sellers.
Once these issues are tackled then you find yourself in a sea of legal paperwork. Seller Disclosure Michigan documents are one of the legal documents in your journey of selling. They are complex and may also seem daunting. Worry not, we are here to guide you through real estate disclosure laws in Michigan.
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💲 List your property with Houzeo’s Freemium Plan
💲 Purchase the “Contract to Close Upgrade Package”. A Licensed broker will review your paperwork to make sure it is appropriate.
In addition, you should also have the settlement agent review the paperwork so you cover all bases.
» More: Start your FREE listing NOW!
*Seller disclosures are exclusively the responsibility of a home seller. Regardless of the service, you engage in, you are required to ensure seller disclosures provided by you are complete and accurate to your best knowledge. Houzeo is not a brokerage or a licensed agent. It is a tech platform, and the tips presented here should not be construed as advice for which a real estate or attorney license is required.
What Are Seller Disclosures?
The Michigan Seller’s Disclosure Statement is a kind of a standard checklist form containing material defects and features of the property. It provides information about the property that may negatively affect the value of the house.
If there are material defects in a property that may impact the value of the property and the seller is aware of them, the seller must disclose them. However, sellers should report these defects to the best of their knowledge and understanding.
📝 Note: From pest infestation to pending legal issues, you shall disclose any known information about your Michigan house. This will help you avoid future disputes.
Usually, the disclosure form is completed along with the listing paperwork – especially in the Multiple Listing Service (MLS) provided by the listing agent.
» More: Paperwork for Selling a House Without a Realtor
Importance Of Seller Disclosures
Sellers’ disclosures serve the following purpose in real estate transactions:
| # | Importance | Description |
|---|---|---|
| 🔎 | Give Complete Information About The Property | Disclosures help communicate the defects present on the property. They ensure that all the stakeholders involved in the transaction are well aware of the property's history. |
| ⚖️ | Protects Sellers Against Legal Liabilities | Once you disclose all the known defects present in the house or which come to light during the inspection, you may be exempted from any future liability against those defects. |
| 👍 | Develops Credibility | Honesty, accuracy and transparency are of utmost importance when selling your house. Disclosures are a way of achieving all of these and thereby enhancing your credibility. |
Michigan Disclosure Law
Michigan real estate disclosure law is governed by the Seller Disclosure Act, 1993. This Act prescribes the Michigan Seller’s Disclosure Statement (SDS), a form that home sellers have to provide to all prospective buyers.
A seller usually submits this form before the closing of the purchase agreement. The SDS can be given to a seller’s agent, buyer’s agent, or the buyer itself as well.
- ✍️ Editor’s Note: Sellers who are selling their house the FSBO way in Michigan are advised to keep their Disclosure Statement ready before listing on the MLS. It increases your credibility as a seller, as it gives buyers an idea of the property’s condition early on.
Michigan Seller’s Disclosure Statement
A draft of the Seller’s Disclosure Statement in Michigan can be found under Michigan Compiled Laws §565.957. However, this is a simple ‘yes’ or ‘no’ questionnaire form where the seller marks in appropriate boxes concerning the property’s condition. Things that are not within a seller’s knowledge can be marked as ‘unknown’.
📝 Note: The seller only discloses the facts he/she is aware of and understands completely. For facts that are unknown to a seller or which are not reasonably visible, it is a buyer’s duty to inspect them.
Here’s a summary of the disclosures which are made in the form:
| Appliances, Systems & Services | The first part covers a list of various amenities which come with the property. The comprehensive list contains 30+ items, including a refrigerator, electrical system, sewage system, etc. |
| Property Condition & Improvements | In this part, you give a condition update about systems like a basement, roof, heating, plumbing, electricity, etc. You mention whether the warranties are close to expiring as well as the period for which the systems are in use. Other things listed in this part include flood insurance disclosure, and disclosure of environmental hazards like radon gas, lead-based paint, formaldehyde, and more. |
| Other Regulations | If pending litigation affects your right to sell the property, you have to mention so. Along with that, shared walls, fences, and common areas should be disclosed. Meanwhile, if your property is being encroached, or an easement lies on it it can be disclosed in this part. Additionally, you note if the property was previously damaged due to fire, winds, floods, or landslides. |
Lead-Based Paint Disclosure Michigan
This applies to homes built before 1978. It is a federal disclosure that all American home sellers are required to furnish. However, you need to fill out a form for disclosing hazards related to lead paint.
Clicking on the image below will redirect you to the form:
» Also Read: Foreclosure in Michigan– Read our blog to know how to stop foreclosures in Michigan.
Michigan Seller’s Disclosure Exemptions
Under certain prescribed circumstances, a seller does not need to provide a Michigan seller’s disclosure statement. Briefly summarized, these conditions are:
| Sr. No. | Exemption |
|---|---|
| 1. | The house is being sold under a court order which includes - foreclosure sale, sale by a trustee in a bankruptcy case, or transfers from a decree of specific performance |
| 2. | The transferee is a beneficiary under a trust or foreclosure deed, or a mortgagee in interest |
| 3. | The transfer is a foreclosure sale made after a default in mortgage, deed or trust. It can also be made by a mortgagee or beneficiary who has acquired the property in lieu of foreclosure |
| 4. | The transferor is an executor of a will, or a fiduciary administering a deceased person's estate, guardianship, conservatorship, or trust |
| 5. | Transfer between one or more co-tenants of the same property |
| 6. | The transferee is a spouse or a person in the lineal line of consanguinity |
| 7. | Transfer arising from a divorce, maintenance or property settlement between spouses |
| 8. | The transfer is made to or from a government entity |
| 9. | Transfers made by a licensed 'Residential Builder' of newly constructed residential property that has not been inhabited |
When To Submit Michigan Seller’s Disclosure Statement?
Time is of the essence when you provide the buyer with the seller disclosure statement in Michigan. Under the Michigan Compiled Laws, a seller must provide the prospective buyer before executing the purchase agreement.
If a seller fails to do so within time, the buyer has a right to terminate the purchase agreement completely.
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Also Read: Companies that buy houses for cash in Michigan– Find out the 9 Best Companies that Buy Houses for Cash in Michigan.
Penalty For Lying On Seller’s Disclosure Statement Michigan
| Before executing the purchase agreement | A buyer may terminate the agreement if they find any information which does not correlate with what is mentioned in the disclosure statement. |
| After the sale is completed | The buyer can file a case for fraudulent misrepresentation, or omission. |
A buyer may file a case for fraud, misrepresentation, or deceit under any other prevailing law regardless of the Michigan real estate disclosure law.
📝 Note: A seller is held liable only for the material defects which he/she lied about. The law also states that a seller need not conduct any inspection but disclose what is ‘best information available and known‘.
If any defect appears after the disclosures have been submitted, it does not count as misrepresentation. But to avoid a lawsuit, a seller is advised to give notice about it to the purchaser as soon as possible.
» Also Read: Best Real Estate Websites in Michigan– Find out the best real estate websites in Michigan.
Most Common Mistakes By FSBO Home Sellers In Disclosures
The main object of disclosures in any area is to give clarity and perspective to a buyer. Buyers who are looking for a home usually have certain criteria in mind before searching for a home. A seller disclosure acts as a bridge to close these doubts, giving buyers a reason to have faith in you and your deal.
- One of the biggest mistakes a seller can make is not giving disclosures at all. The lack of trust between a buyer and seller can demotivate a buyer from considering your property altogether. Hence, it is suggested that sellers complete all disclosure formalities as soon as possible, even though it may not be legally required in your state.
- Likewise, sellers also get an option to mark a point as ‘unknown’ in disclosures. This gives you ample opportunity to be honest in your disclosures. Also, marking a certain disclosure clause as ‘unknown’ shifts the burden on a buyer to inspect that particular problem. Hence, don’t make the mistake of lying on your disclosures, as that would count as fraudulent misrepresentation and attract a lawsuit.
- Most state laws prescribe that the disclosures should be provided before closing. As an FSBO seller, it is your duty to provide disclosures as soon as possible, since you do not have a real estate agent to do these things for you.
- ✍️ Pro Tip: Sellers who are selling their house the FSBO way are advised to keep their Disclosure Statement ready before listing on the MLS. It increases your credibility and reliability from a buyer’s perspective, as they get an idea of the property’s condition early on.
» More: How To List On MLS For Sale By Owner Without A Realtor
Tips To Minimize Issues in Disclosure Documents
| Review And Verify | There’s a time allowance (some permit 10 days) to review and verify everything about your Sale & Purchase Agreement—also the square footage, home usage, and marketing. |
| Ask Questions | Ask questions when in doubt. This would help you in avoiding future troubles. |
| Hire A Professional Inspector | A professional inspector can help you gather backup information about the property’s condition. You can also opt for a pre-inspection before listing. » More: Michigan Home Inspections – Read everything you need to know about home inspection in Michigan. |
| Disclose Everything | To avoid problems in your home disclosure statement disclose everything you know honestly. Even though it’s a minor issue, you must disclose it. |
| Get A Licensed Agent Involved | The best way to avoid disclosure issues is to get a licensed real estate agent. Agents can help you manage and assist you in the process along the way. Read our blog on the List of real estate agents in Michigan. » More: Best Realtor in Michigan – Read more to know more about best realtors in Michigan. |
Also Read: Home Inspectors – Find out the best home inspectors.
- ✍️ Pro Tip: List Your Property With Houzeo
One of the best ways to minimize problems in your seller’s disclosure is to Purchase the “Contract to Close Upgrade Package”. A Licensed broker will review your paperwork to make sure it is appropriate. In addition, you should also have the settlement agent review the paperwork so you cover all bases.
» More: Start your FREE listing NOW!
Also Read: Average Cost of Home Inspection in Michigan – Read to know the average cost of home inspection in Michigan.
Final Word: Complexity Of Sellers Disclosure Michigan
| Level of Complexity | Average |
| Is Michigan a Caveat Emptor State? * | Yes |
| Is Michigan a Non-Disclosure State? ** | No |
*Caveat Emptor Rule means states that it is the buyer’s responsibility to find out if there are major or minor defects with the property. And if he/she does not perform the necessary due diligence to inspect, it’s entirely not the seller’s liability if the property does not meet the expectation.
**In a non-disclosure state, the selling price of a house is not available to the masses on an open source.
To sum it up, completing a Michigan seller’s disclosure statement is a somewhat complex process.
Selling your house FSBO is usually good but then you have to deal with all the disclosures on your own. This demands you be aware of all the disclosure requirements and even a single mistake can cost you dearly.
- ✍️ Editor’s Note: Though selling your home yourself on a For Sale By Owner website can save you thousands in commission, we highly recommend you add a Flat Fee MLS listing to your marketing strategy. Check out the best Michigan MLS Listing.
» More: Flat Fee Michigan
Dealing with seller disclosure in Michigan comes with its own set of challenges and can give sellers sleepless nights if not dealt with properly. This is where Houzeo can help you.
By listing your property with Houzeo, you get access to all forms in electronic format. And that too, for FREE! Houzeo has segregated all the disclosures state-wise so that you don’t have to hunt for Michigan sellers’ disclosure statements separately.
Check out some of the Houzeo Offers and how it has helped customers around the US.
Frequently Asked Questions
Is a sellers disclosure required in Michigan?
Yes. In Michigan, the seller's disclosure is a standard form prescribed under the state laws which all sellers are supposed to complete. This form is to be submitted to any buyer before the sale agreement is executed.
Is Michigan a non-disclosure state?
No. The selling price of houses in Michigan is available to the masses on an open-source. This increases the credibility as well as draws in buyers who are looking for properties within that budget.
Do you have to disclose mice when selling a house in Michigan?
If the mice infestation is a fact known to the seller, then they must disclose it. If the fact is unknown or not inspected, the seller is not legally obligated to disclose it.
Is Michigan a buyer beware state?
Yes, Michigan is a 'caveat emptor,' or a buyer beware state. Although the seller carries some liability, it is a buyer's responsibility to inspect and assess the property before buying it to prevent encountering unknown defects.
Do you have to disclose if someone died in a house in Michigan?
No. Unlike some states which make disclosing facts like death paranormal activity on the property or sex offenders in the area a mandatory disclosure, the same does not apply to Michigan.
What is a Michigan Disclosure Form?
It is a simple 'yes' or 'no' questionnaire form that the seller marks in appropriate boxes concerning the property's condition. Things that are not within a seller's knowledge can be marked as 'unknown'.
Do you have to disclose asbestos when selling a house in Michigan?
If the presence of asbestos is a fact known to the seller, then they must disclose it. If the fact is unknown or not inspected, the seller is not legally obligated to disclose it.
