National Real Estate Exam (PSI)Property DisclosuresMedium
A seller's disclosure statement is silent about mold, but the seller previously experienced a basement flood that caused visible mold growth, which was later painted over. The seller says nothing to the buyer. What is the most accurate statement about this situation?
- AThe buyer's home inspector, not the seller, bears full responsibility for discovering mold
- BMold issues never need to be disclosed since they are considered a normal maintenance issue
- CDisclosure is only required if the mold is currently visible at the time of the walkthrough
- DThe seller has likely violated disclosure obligations by failing to reveal a known material fact affecting habitability and value
Show answer & explanationAnswer & explanation
Correct answer: D. The seller has likely violated disclosure obligations by failing to reveal a known material fact affecting habitability and value
Known mold contamination, especially resulting from a past flood, is a material fact that can affect health, habitability, and property value; concealing it (e.g., painting over evidence) typically violates seller disclosure obligations in most states.
Why the other options are wrong
- A. Inspectors assist buyers, but sellers still must disclose known issues.
- B. Mold affecting habitability/value is generally material and must be disclosed if known.
- C. The seller's duty is based on known history, not just current visibility.
Mold Disclosure
Sellers must generally disclose known mold contamination or water intrusion history, as it can be a material fact impacting health and property value.
- Concealing evidence (e.g., painting over mold) can constitute fraud
- Mold is linked to moisture/flooding history
- Many states include mold on standard disclosure forms
Memory trick: Paint over mold, and you paint yourself into legal trouble.