There are two types of disclosure statements you are most likely to encounter. The first is a document that outlines all the terms and conditions of a loan. The information should include data on the rate of the loan, fees, the total amount borrowed, responsibilities of both parties, prepayment rights and insurance.
The second type of disclosure statement relates to your IRA. This document will describe, in clear language, exactly what the rules of your IRA are. You must receive this document before the IRA is established or while you are establishing the account.
You will be appraised of fees, distribution rules, penalties and all the other rules associated with your particular account. The disclosure must be provided before the transaction is complete so that you have the option of revoking or canceling the contract if you are unhappy with the terms.
On the occasion that a disclosure statement is required it is likely that you will be asked to sign a document stating that you have received, read and understood the disclosure statement. Make sure you do read the statement and ask any questions that you have. There are points which might be confusing and you are entitled to clarification. Don’t succumb to pressure to close the deal. If you fail to do your part, and don’t read the document carefully, you won’t have legal recourse if problems crop up later on.
Another time you may encounter a disclosure statement is during a real estate transaction. The seller must disclose information about known problems with the property. If they fail to do so, and the buyer can prove knowledge of the issue, then they are entitled to compensation.
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