How to handle seller disclosures during your home purchase

Written by Samantha SheltonNMLS 1647301Updated September 2026

Home buyers reviewing seller disclosures with their agent at a dining table before finalizing a purchase

To handle seller disclosures, read the statement line by line the day it arrives, flag every defect the seller checked off, basement water, roof leaks, structural damage, pest history, and use your home inspection contingency to verify what the form claims. Two clocks start when you receive it: for most homes built before 1978, federal law requires the seller to give you a 10-day window to inspect or test for lead-based paint before you’re obligated to buy, and in Michigan, a disclosure delivered in person after you’ve signed a purchase agreement gives you 72 hours to terminate in writing.

Sellers must disclose defects they know about, not hunt for the ones they don’t. Michigan’s statute says a seller isn’t liable for failing to disclose something only an inspection of inaccessible areas, or an expert, could have found.

Learn how to handle seller disclosures, including what sellers have to reveal, which answers deserve a written follow-up, and your options, repairs, a credit, or an exit, when problems surface. Newer to this? Start with our Home Buying guide.

Key takeaways:

The form covers known conditions only: Michigan’s statutory disclosure statement runs a 36-item appliance checklist, 12 property-condition questions, and 11 more yes-or-no items, and says on its face that it is not a warranty and not a substitute for inspections.
Verification is your job: A home inspection contingency is how you check the form, and for most pre-1978 homes the seller must also allow a 10-day window to inspect or test for lead-based paint.
A late disclosure is an exit: If the statement arrives after you’ve signed, Michigan gives you 72 hours to terminate in writing when it’s delivered in person, and 120 hours by registered mail.

What is a seller’s disclosure?

A seller’s disclosure is a signed written statement in which the seller reports the known defects and conditions of the property, roof, foundation, plumbing, electrical, heating, water intrusion, pests, hazards, and past repairs. Requirements vary by state, and most use a standardized checklist. Michigan requires one statutory form on any transfer of 1 to 4 residential dwelling units.

Its job is to move what the seller knows into writing before you’re bound. It isn’t an inspection report, a warranty, or part of your contract. Michigan’s form says in capital letters that it is a disclosure only. Read what a seller’s disclosure is for the full anatomy of the document, and our home buying process guide for where it lands relative to the offer and closing.

What sellers have to disclose

State forms differ but ask the same categories. Michigan’s is a reliable template:

Water and drainage: Water in the basement or crawl space, plus settling, flooding, drainage, or grading problems.
Roof and structure: Roof leaks and age, major fire, wind, or flood damage, and structural work done without permits or licensed contractors.
Systems: Heating type and age, plumbing material, electrical problems, and a 36-item appliance checklist marked Yes, No, Unknown, or Not Available.
Water and waste: Well type, depth, age, and repair history, whether the water has been tested, and septic tank and drain field condition.
Pests and hazards: Infestation history, and known asbestos, radon, formaldehyde, lead-based paint, storage tanks, or contaminated soil.
Legal and money items: Encroachments, easements, zoning violations, HOA authority, outstanding assessments, and pending litigation.

Federal law adds a layer no state form replaces. For most housing built before 1978, the seller must disclose known lead-based paint and hazards, hand over any records they have, provide the EPA’s lead hazard pamphlet, attach a signed lead warning statement to the contract, and allow that 10-day evaluation period. You can waive the window in writing, or both sides can agree to a different one. Because state rules vary, Nolo’s legal overview of seller disclosure requirements is worth reading first.

What sellers do not have to do

Sellers don’t have to hire an inspector, open walls, or investigate conditions they’ve never noticed. Michigan’s act shields a seller from liability for an error outside their personal knowledge, and a disclosed item that goes stale later isn’t a violation. Though the form does commit the seller to disclose changes to structural, mechanical, or appliance systems before closing.

How to review a seller’s disclosure, step by step

Give the disclosure 30 focused minutes the day it arrives, because your window to act can be as short as 72 hours. Work it in four passes.

1. Read every line, including the blanks

Read all 59 questions and circle every Yes, every Unknown, and every blank. A blank on a form the seller is instructed to answer completely is itself information. Check the dates at the bottom, too: how long the seller lived in and owned the home tells you how much history the form can cover.

2. Turn every “yes” into a written question

A checked box tells you a condition exists. It doesn’t tell you when, how bad, who fixed it, or whether it’s ongoing. For each Yes, ask through your agent, in writing, for the date, cause, repair, contractor, and invoice. “Evidence of water in the basement” covers both a hose left running in 2019 and a foundation that floods every spring.

3. Treat “unknown” as a question, not an answer

Unknown is a legitimate answer under Michigan’s act, and it’s where risk hides, especially on a home the seller inherited or never occupied. A cluster of Unknowns on the five priciest systems to replace (roof, furnace, electrical panel, well, septic) means your inspection carries more weight.

4. Build your inspection scope from the form

Hand the disclosure to your inspector before the appointment and ask them to prioritize what it flagged. Our home inspection checklist for buyers covers what a general inspection includes, and how to choose a home inspector covers vetting one, start from the American Society of Home Inspectors directory and ask for a sample report before you book.

Disclosure red flags worth a written follow-up

Vague repair language: “Fixed,” “handled,” or “repaired as needed” with no date, contractor, or invoice. Ask for the paperwork.
Unpermitted work: A Yes on structural work done without permits or licensed contractors can become an insurance, resale, and municipal problem at once.
Fresh paint over one wall: A single repainted section of basement wall or ceiling, especially when the water question says No, deserves a moisture meter reading.
Assessments and litigation: Municipal assessments and pending lawsuits never surface in an inspection, they surface in your title work, one reason choosing a title company matters.

How to verify the disclosure and negotiate what you find

The disclosure gives you the seller’s knowledge; the inspection gives you a professional’s. Your contingency turns the gap into leverage.

The inspection is the verification step, not the appraisal

An appraisal estimates value for your lender. It is not a home inspection, and it doesn’t protect you. FHA’s buyer notice, form HUD-92564-CN, puts it in bold, “Appraisals are NOT Home Inspections”, and adds that FHA does not perform inspections, does not guarantee value or condition, and cannot lend you repair money after closing.¹ See the home appraisal process for what each professional examines, and common home inspection pitfalls before shortening your window.

Add specialized inspections when the form points to one

Radon and lead: The EPA and the Surgeon General recommend every house be tested for radon, and a short-term test needs at least 48 hours. Use the federal 10-day lead window on pre-1978 homes.
Well and water quality: If the form lists a well, get the depth, age, and last test results, then test again, see how well water impacts a home’s value.
Septic: A disclosed septic system deserves its own inspection and pumping records, see buying a home with a septic system.
Flood exposure: The form asks whether the seller carries flood insurance; a Yes changes your quote, start with buying a home in a flood zone.

Repairs, a credit, or an exit

When verification turns up something real, you have four moves: a seller repair, a closing cost credit, a price reduction, or termination under your contingency. Our guide to negotiating repairs after a home inspection covers prioritizing the ask, and negotiating house prices covers the dollars.

They aren’t interchangeable. Say a contractor quotes $9,400 for the roof the seller disclosed on a $285,000 Waterford purchase. A $9,400 closing cost credit leaves the price and your loan amount unchanged and puts cash back in your pocket at the table; a $9,400 price reduction drops the price to $275,600, lowering your loan amount and payment but doing nothing about the roof this year.² And some houses aren’t worth the fight, negotiating a home purchase gets easier when both sides know you’ll walk.

How disclosures and repairs affect your financing

Call your loan officer before agreeing to any of it, because two of those four moves change your loan. Seller-paid credits are capped by program rules tied to your loan type and down payment, so a credit above the limit gets trimmed at the closing table, see how seller-paid closing costs work first. Your lender must also give you the Closing Disclosure at least three business days before closing, which is how last-minute repair talks move closing dates.

Condition changes what a lender will do. Under Fannie Mae’s appraisal standards, a property with substantial damage or deferred maintenance affecting safety, soundness, or structural integrity earns a C6 condition rating, and those loans aren’t eligible for sale to Fannie Mae until repairs bring it to at least C5, the appraisal gets completed “subject to” that work. Across Align Lending’s lender network, the disclosure answers that most often become financing conditions are the ones an appraiser can see: roof, water intrusion, and mechanicals. See preparing for a home closing and the CFPB home-buying process resources.

When seller disclosure rules don’t apply

Michigan exempts nine categories of transfer from the disclosure requirement. Several are the deals buyers get most excited about:

Foreclosures and deeds in lieu: Foreclosure sales and transfers to a lender by a defaulting borrower are exempt, which is why buying a foreclosed home and buying distressed properties demand more inspection budget, not less.
Court-ordered and estate transfers: Probate, writs of execution, bankruptcy trustees, eminent domain, and transfers by a nonoccupant fiduciary handling an estate or trust sit outside the act.
New construction: A licensed Michigan builder selling a never-inhabited new home is exempt, not a reason to skip home inspections for new construction.
Family and government transfers: Transfers to a spouse, parent, grandparent, child, or grandchild, between co-tenants, under a divorce judgment, or to a government entity are exempt.

“As-is” is a separate question. Selling as-is generally means the seller won’t make repairs; on a non-exempt Michigan sale it does not erase the duty to complete the form honestly. The act requires each disclosure to be made in good faith, honesty in fact in the conduct of the transaction, though it also says a transfer isn’t invalidated solely because someone failed to comply.³ If you suspect a defect was concealed, preserve the disclosure, the inspection report, and every written message, then talk with a Michigan real estate attorney.

What Michigan buyers should know

Michigan’s Seller Disclosure Act (1993 PA 92) hands you a deadline that runs in hours rather than days.

72 hours to terminate, or 120 by mail: If any required disclosure or amendment arrives after the seller signs a binding purchase agreement, you may terminate by delivering written notice within 72 hours of in-person delivery, or 120 hours of delivery by registered mail. That right expires once the property transfers by deed.
One statutory form, 59 questions: The act prescribes the exact form, 36 appliances and systems, 12 property-condition questions, and 11 more covering easements, assessments, unpermitted work, and litigation. It warns in capital letters that failing to provide a signed statement lets a purchaser terminate an otherwise binding agreement.
Wells and septic get their own lines: Two of the 12 property-condition questions cover the well (type, depth, age, repair history, and water testing) and the septic tank and drain field, a live issue across Oakland, Livingston, and Lapeer county acreage.
Don’t budget from the seller’s tax bill: The form directs buyers to the local assessor’s office for the property’s state equalized value, principal residence exemption information, and other real property tax information, and that’s the number to get, because Michigan law uncaps a property’s taxable value to its state equalized value in the calendar year following a transfer of ownership. Pull your own figure and fold it into your closing costs and escrow math.

The form also tells Michigan buyers to get professional inspections covering indoor air and water quality, mold, mildew, and bacteria. It repeatedly instructs you to verify it.

How Align moves your purchase to the closing table

Over the last 12 months, Samantha's loans averaged under 14 days from application to clear to close, across more than 100 loans. Your closing date is set by your purchase agreement. Her job is to have your loan ready well before it.

She handles your file herself, with a processor supporting her behind the scenes. You always know who to call, and the person who answers knows your goals.

Build your homebuyer game plan

Sources: Align Lending loan records, 12 months to October 2026.

FAQ: Seller disclosures

Here are answers to common questions about seller disclosures.

What is a seller’s disclosure and what must it include?

A seller’s disclosure is a written statement in which the seller reports known defects and conditions of the property, typically covering the roof, foundation, plumbing, electrical, HVAC, water intrusion, pests, and past repairs. Requirements vary by state, and most use a standardized checklist form. It reflects only what the seller actually knows, not what a professional might find. In Michigan it is expressly a disclosure, not part of the contract. What binds both sides is the home purchase agreement.

Can I back out of buying a house after seeing the seller’s disclosure?

Often, yes. If the disclosure arrives after your offer and reveals significant previously unknown problems, your purchase agreement and state law usually give you a window to renegotiate or withdraw. In Michigan, if the disclosure is delivered after the seller signs, the buyer generally has 72 hours to terminate in writing when it is delivered in person. Your inspection contingency provides a second exit path, see how contingencies in home offers work.

What happens if a seller lies on a disclosure form?

A seller who knowingly conceals or misrepresents a material defect can face legal liability, including damages for repair costs after closing. Proving it requires evidence the seller knew about the problem, which is why buyers should keep the disclosure, the home inspection report, and all written communications. If you discover concealed defects after closing, consult a real estate attorney about your options.

Do I still need a home inspection if I have the seller’s disclosure?

Yes. The disclosure covers only what the seller knows, while an inspection is an independent professional assessment of what the home’s systems and structure actually show. Inspectors routinely find issues sellers were honestly unaware of, from failing water heaters to attic moisture. Treat the disclosure as a roadmap of questions and the inspection as the verification step, and know the stakes before considering a home inspection waiver.

The bottom line on seller disclosures

Handling seller disclosures well comes down to speed, questions, and verification. Read the statement the day it arrives, because a Michigan disclosure delivered in person after you’ve signed gives you just 72 hours to terminate in writing, and 120 hours by registered mail. Turn every Yes and every Unknown into a written question with a date, a cause, and an invoice attached. Then verify it with a general inspection, the specialized tests the form points to, and the federal 10-day lead-based paint window on pre-1978 homes. Sellers disclose only what they know. The form is not a warranty and not a substitute for an inspection.

If you’re ready to buy with your financing on solid ground while you work through disclosures and inspections, talk to Align Lending. We’ll shop your scenario across our lender network and tell you fast how a repair or credit affects your approval. Call 248-506-5727 or start online today.

Footnotes:

1. Align Lending is not acting on behalf of or at the direction of FHA or HUD. FHA appraisal and inspection policies, and the content of HUD form 92564-CN, are set by HUD and are subject to change. Return to text.

2. Example figures are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Repair costs, seller credit limits, loan amounts, and cash to close depend on your application, the property, the appraisal, your loan program, and market conditions. Return to text.

3. Summaries of the Michigan Seller Disclosure Act are provided for general information only and are not legal advice. Statutory requirements, exemptions, and deadlines are set by Michigan law and are subject to change; consult a licensed Michigan real estate attorney about your transaction. Return to text.

Sources: Michigan Seller Disclosure Act, 1993 PA 92. Applicability to 1 – 4 residential dwelling units, MCL 565.952; exempt transfers, MCL 565.953; delivery and the 72-hour and 120-hour termination rights, MCL 565.954; limits on transferor liability for information outside personal knowledge, MCL 565.955; post-delivery inaccuracies and unknown information, MCL 565.956; the statutory disclosure form and its contents, including the advisory that state equalized value, principal residence exemption information, and other real property tax information is available from the local assessor’s office, MCL 565.957; good faith defined as honesty in fact, MCL 565.960; transfer not invalidated by noncompliance, MCL 565.964. Uncapping of taxable value to state equalized valuation in the calendar year following a transfer of ownership, MCL 211.27a(3). Federal lead-based paint disclosure and the 10-day evaluation period for target housing built before 1978, 40 CFR §§ 745.101, 745.103, 745.110 and 745.113 (Residential Lead-Based Paint Hazard Reduction Act of 1992, 42 U.S.C. 4852d) and the U.S. Environmental Protection Agency. Appraisals are not home inspections, FHA does not perform home inspections, and FHA does not guarantee value or condition, U.S. Department of Housing and Urban Development, Federal Housing Administration form HUD-92564-CN, “For Your Protection: Get a Home Inspection” (OMB approval no. 2502-0538); the same form carries the EPA and Surgeon General recommendation that all houses be tested for radon. Condition rating C6 ineligible for sale to Fannie Mae and appraisals completed “subject to” repairs, Fannie Mae Selling Guide B4-1.3-06. Closing Disclosure required at least three business days before closing, Consumer Financial Protection Bureau.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Seller disclosure requirements, termination deadlines, and remedies vary by state and by contract; disclosure forms, purchase agreements, and contingency language should be reviewed by a licensed real estate professional or attorney in your state. Consult a qualified professional about your situation. Program terms and figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.