What is the purpose of property disclosure statements?

The purpose of property disclosure statements is primarily to inform potential buyers about the conditions and defects related to a property. This transparency is crucial in real estate transactions, as it helps buyers make informed decisions based on the current state of a property. By providing details about known issues such as roof leaks, plumbing problems, or environmental hazards, sellers disclose vital information that affects the property's value and safety.

This practice not only fosters trust between the buyer and seller but also helps to protect sellers from potential legal claims that may arise after the sale. An accurate disclosure statement serves to document that the seller has made a genuine effort to inform prospective buyers about the property's existing conditions, which can influence negotiations and overall buyer satisfaction.

The other options do not accurately reflect the primary function of property disclosure statements. While summarizing neighborhood property values, providing financial history, and detailing closing costs are all important aspects of real estate transactions, they are not the focus of a property disclosure statement. This statement specifically relates to the physical condition and potential issues with the property itself, making the second option the correct answer.