When selling your home, you may be obligated to disclose problems that could affect the property's value or desirability. In most states, it is illegal to fraudulently conceal major physical defects in your property such as a basement that floods in heavy rains. And states are increasingly requiring sellers to take a pro-active role by making written disclosures on the condition of the property.

Generally, you are responsible for disclosing only information within your personal knowledge, but that doesn't mean you'll always have an adequate defense if you are sued over an obvious defect or in cases where the law requires you to determine whether a defect exists.

While it's not usually required, many sellers hire a general contractor to inspect the property. The information will help you determine what needs repair or replacement and will assist you with preparing any required disclosures. An inspection report is also useful in pricing your house and negotiating with prospective buyers.

If you have an inkling of a question about whether or not you should disclose something, avoid the potential for liability and tell potential buyers about it. Full disclosure of any property defects found in a home inspection will help protect you from legal problems later, such as buyers who want out of the deal or who claim damages suffered because you carelessly or intentionally withheld information about your property.

And remember, just because you disclose a problem doesn't mean you must repair or correct it. The disclosed item can become a point of negotiation between you and your buyer.

Most laws mandate disclosures on special disclosure forms the seller must sign and date. Be sure the buyer acknowledges receipt of the disclosures by signing and dating the form as well. If your state doesn't require a specific disclosure form, be sure the buyer otherwise affirms receipt of your disclosures -- in writing.

Check with your real estate broker or attorney or your state department of real estate for disclosures required in your state. Also, check with your city planning department for information on local ordinances and disclosures that affect your sale. Finally, be aware that real estate brokers are increasingly requiring that sellers complete disclosure forms, regardless of whether or not it's legally required.