Have you ever heard an agent mention the “SPUDS” perhaps in a side conversation with another agent or maybe even in a conversation with you directly? You might have been a little confused at first and maybe even wondering why your agent is all of the sudden talking about potatoes. (kidding!) In the real estate world, we kind of have our own terminology for many things, the “spuds” document being one. The term “Spuds” came from the abbreviated version of a document included in every sale, the SPDS, or the Seller Property Disclosure Statement.
So let’s talk about what the SPDS actually is. The SPDS is actually an essential document for both parties of a real estate transaction. This is the document the sellers complete in order to disclose to the buyers any and all facts about the property, or the property’s history essentially.
It’s important to note that the purpose of this document is not to scare a buyer away. We’ve actually come across sellers who try to hide things or want to leave something out conveniently. First of all, non-disclosure is a really good way to get yourself sued, so just don’t do it! Second, this document aims to provide the buyer with the home’s history so they are aware of what they are getting into.
For a Buyer, this document provides insight into the home being purchased. The buyer will receive a copy of the SPDS at the beginning of the inspection period. If the seller fails to deliver this document, they could be in breach of contract. Once received, the buyer will look over the information provided to see if there is anything that worries them about the home that could cause them to back out of the transaction. If so, they can further inspect the item and decide if they’d like to cancel the transaction before the end of the inspection period.
The SPDS is broken up into the following sections:
- Ownership and Property – the seller will disclose how long they have owned the property and how long they’ve lived in it. If the property is a rental, they will enter that information in this section.
- Building and Safety Information – The seller would list any improvements to the property in this section. They would also list any damages or problems they may have had, such as roof leaks.
- Utilities – This section will let the buyer know which water, power, sewer, gas, cable, and so forth.
- Environment Information – This section lists things like noise from a nearby highway or foul odors from a nearby farm.
- Sewer/Wastewater Treatment – The seller discloses whether or not the property is connected to a sewer or what type of wastewater treatment is available.
- Additional Information – This section allows the seller to disclose anything else they think might be necessary.
There is one more factor to keep in mind regarding disclosure. If the home was used as a rental, the seller may not know everything about it and therefore does not need to disclose it. Regardless, in addition to the SPDS, the buyer will also get an insurance claims report during the inspection period, showing any claims that insurance had to pay out related to the home. This would include any of the rather significant events like fire damage or more minor repairs like slab leaks, both equally important for the buyer to know about the property about to be purchased.
As a general rule of thumb when it comes to disclosure, and good to keep in mind the next time you sell a home… “when in doubt, disclose.”