A disclosure statement is a statement written in plain language that is easy to understand and provides disclosures of information that may be relevant or important. Such statements are used in a wide range of contexts, from those of bias provided by researchers when submitting material for publication in a scholarly journal to others that may be mandated by law when people open certain types of retirement accounts, such as IRAs. When a disclosure statement is provided, people should take the time to read it because it is being provided for a reason, and the failure to read the statement could expose someone to problems in the future.
In the financial world, disclosure statements are used to provide information to people who are about to embark on financial contracts so that they clearly understand what is involved in the contract. Classic examples include those that are sent out before loans can be originated, and those that accompany the opening of retirement accounts. These statements must be issued before arrangements are finalized so that people have an opportunity to revoke or cancel arrangements if they learn about something important in the disclosure.
When such statements are required by law, people may also be asked to sign forms indicating that they have read and understood them. It is important for individuals to carefully review the document and to ask for clarification on any points that are confusing before signing such a release, even if someone is being pressured to sign and get the transaction over with. Failure to exercise due diligence may mean that people do not have legal recourse if problems related to the contract develop.
They are also used in real estate transactions. A property disclosure statement must be provided by a seller in many areas of the world when a property enters escrow. The seller must disclose any problems that he or she is aware of in connection with the property, such as the presence of known toxins, faulty wiring, and other issues. If the seller does not disclose a problem and a buyer can prove that the seller was aware of the issue, there can be legal consequences.
In areas where such a statement is required by law, it is typically printed out on a form. Using a form ensures that all of the legally required information is present and helps people interpret the statement by presenting it in a standardized way.
