In a real estate transaction, what is disclosed in the disclosure statement?

The disclosure statement is a critical document in real estate transactions that provides potential buyers with essential information about the property. The correct answer highlights that known issues or defects with the property must be disclosed, which helps ensure transparency and protects buyers from unexpected problems after the purchase.

When sellers are required to disclose known issues or defects, it means they must inform the buyer about any material facts that could affect the property's value or desirability, such as structural problems, pest infestations, or environmental hazards. This process not only helps buyers make informed decisions but also minimizes the risk of legal disputes after the sale.

While inspection reports, details about previous owners, and terms of sale are relevant to a real estate transaction, they do not specifically pertain to the seller's obligation to disclose known defects. The inspection report is typically conducted after an offer is made and may reveal issues, but it is not a mandatory disclosure from the seller. Information about previous owners and the terms of sale are not directly connected to the condition of the property itself, which is the primary focus of the disclosure statement.