Material Facts and Disclosure Guidance for Conditions Near a Listed Property

QUESTION: I am listing a home for sale. What information must I disclose about things that impact the area around the home? For example, what should we say about a commercial building being constructed next door, a neighbor dispute, a pending HOA lawsuit, or criminal activity in the neighborhood?

ANSWER: North Carolina brokers must disclose all material facts they know or reasonably should know, under Real Estate Commission Rule 58A .0114. A material fact is anything that would affect a reasonable buyer’s decision to purchase, or the price or terms they are willing to offer. Importantly, this duty extends beyond the physical structure to conditions and circumstances surrounding the property.

Examples

• Adjacent construction: If you know that a commercial building is being constructed next to the property, this is material and must be disclosed.
• Neighbor disputes: A casual dislike or unfriendly neighbor does not require disclosure. However, if a neighbor is actively claiming an encroachment, boundary issue, or other legal right, that is a material fact and must be disclosed.
• HOA litigation: A pending lawsuit against the HOA must be disclosed because it could result in special assessments or impact property values. A threatened lawsuit is more fact-specific. If the threat is credible and tied to a concrete dispute that could materially affect the community, it may require disclosure. However, if it is vague or speculative, disclosure may not be required.
• Crime and safety: You are not required to research crime rates or disclose generalized neighborhood crime. But if you have actual knowledge of specific criminal activity directly affecting the property, such as a recent drug raid in the adjoining unit, that would be material. Check out this Q&A for more details.
• Sex offender registry: North Carolina law provides that the fact a registered sex offender lives nearby is not a material fact and does not require disclosure. More details here.
• Death in the home: Likewise, the fact that a person died in the home, regardless of the cause of death, is not a material fact and does not require disclosure. See N.C. Gen. Stat. § 39-50.

When in doubt, disclosure is almost always the best course. This is especially true in scenarios where the property has been damaged and a repair has been performed, because insurance availability may be affected and buyers will want to verify that repairs have been properly completed.

Release Date: 09/18/2025

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