Real Estate Disclosure Laws. It is one of the laws that are required during a disclosure to give out certain information to people in real estate on who they conduct business with. The first source of information comes from the Department of Housing and Urban Development (HUD).
HUD oversees RESPA, a federal law that requires mortgage lenders and banks and brokers to disclose required information to home borrowers or purchasers. These requirements are necessary to help home buyers have information readily available so that they can be prepared and make better buying decisions. Prior to RESPA, many unscrupulous mortgage and land deals took place because there were no controls to keep it from happening.
Most disclosure laws pertain to informing home buyers about things such radon emissions and chemical spills on the property; defects in the property (the condition of the property) — the land and the home itself — that could cause them to rethink their decision or decide if they want the risk.
Disclosure also pertains to real estate escrow accounts. The law, as well as mandating what should happen prior to a real estate sale, also dictates what happens if something goes wrong, such as ability to sue and recover legal fees.
Disclosures also have to happen when brokers and lenders and real estate agents have close personal working relationships with one another that could encourage kickbacks, fee-padding and overcharges that inflate real estate settlement costs above and beyond what are reasonably accepted.
The same laws apply, whether the property is being sold or foreclosed upon.
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