3.2 Indiana Property Disclosure Requirements

The Mandatory Disclosure Statute (IC 32-21-5)

Indiana law requires the seller of residential real estate of one to four dwelling units to complete and deliver the Seller's Residential Real Estate Sales Disclosure Form to a prospective buyer. The disclosure must be furnished before the buyer's offer is accepted; if the seller delivers a substantially incomplete or inaccurate form after acceptance, the buyer may have a contractual right to terminate. The form captures the seller's actual knowledge — Indiana imposes no duty to inspect or investigate, and the disclosure is expressly not a warranty.

Do not confuse this form with the county Sales Disclosure Form (SDF). The IC 32-21-5 seller disclosure describes property condition for the buyer. The separate county SDF (IC 6-1.1-5.5) is a tax/recording document filed with the county auditor for a $10 fee and is required before the deed can be recorded. The exam may test both — keep them straight.

What the Form Covers

When the Form Is NOT Required

The statute exempts several transfer types because there is no traditional consumer seller or the buyer already accepts the condition.

The 'Stigma' Exclusions (Psychologically Affected Property)

Indiana law specifically protects sellers and agents from liability for failing to disclose psychologically affected facts. A property is not a material defect merely because of these circumstances, so they need NOT be disclosed:

• A death on the property, by any cause, including homicide or suicide.
• That an occupant was, or is, infected with HIV or has AIDS (this would also violate fair-housing privacy if disclosed).
• That a felony or violent crime occurred on or near the property.
• The presence of a registered sex offender in the area — buyers are referred to the public registry instead.

The policy reason is that these facts do not affect the physical condition of the house and that disclosing some of them (HIV/AIDS, familial status) would invite fair-housing violations. A buyer who cares about a stigma fact must ask directly or research the public records; the seller and broker have no affirmative duty to volunteer them.

Exam Tip: The classic distractor pairs a physical defect (basement water, faulty wiring) with a stigma item (a death on the property). Only the physical, known defect must be disclosed.

Remedies for a Defective Disclosure

If a seller knowingly conceals or misrepresents a material defect on the form, the buyer's remedies can include rescission of the contract or damages, and the seller may face liability for fraud. But Indiana law shields a seller who delivers an honest, good-faith disclosure that later proves incomplete because the seller genuinely did not know of the problem. The form is a snapshot of actual knowledge, not a home warranty — so a defect that surfaces after closing, which the seller did not know about, generally is not actionable.

Seller and Agent Duties Compared

The seller fills out the form; the listing broker has an independent duty not to misrepresent and not to conceal known material defects, but the broker is generally not liable for an honest error on the seller's form unless the broker had actual knowledge it was false.

Federal Lead-Based Paint Rule

For any home built before 1978, federal law (the Residential Lead-Based Paint Hazard Reduction Act) requires the seller to:

1. Disclose known lead-based paint or hazards and provide any reports.
2. Deliver the EPA pamphlet "Protect Your Family From Lead in Your Home."
3. Include the Lead Warning Statement with signatures in the contract.
4. Offer the buyer a 10-day window to conduct a lead inspection or risk assessment (the buyer may waive it in writing).

Worked example

A seller lists a 1965 ranch with a known cracked sewer line and recalls that a previous owner died of natural causes inside. The seller must disclose the sewer line (a physical, known defect) on the IC 32-21-5 form and must provide the lead-paint disclosure plus EPA pamphlet (pre-1978 home). The seller need not disclose the death, which is a protected stigma fact under Indiana law.