What Is Included in a Disclosure Statement?

A lot of information is often contained in a disclosure statement.

A disclosure statement is a statement required by law in various situations. Disclosure statements are designed to reveal clear, nontechnical information regarding the subject at hand. These statements are common with the sale of property, in financial statements and with loans and individual retirement accounts (IRAs).

Property

When real estate is sold, the seller is required to complete a disclosure statement. This form is intended to disclose any negative or potentially negative facts about the property that the seller knows about. Any defects known are required to be disclosed on this form. If the seller knowingly fails to report such facts, legal action can be taken by the buyer.

Financial Statements

When companies generate financial statements, they are required to disclose certain information. In this situation, if there is any piece of information that might come across as misleading to those reading the statements, the company is required to include an explanation with the financial statement. This is usually done by including a footnote at the bottom of the statement.

Financial Institutions

With IRAs and with loans, financial institutions are required to provide the client with a disclosure statement. With these types of disclosure statements, things such as interest rate information and terms are disclosed in written form and provided to the client.

References

• All Business: Disclosure Statement
• Investopedia: Disclosure Statement