Must I be honest if it will blow the home sale?
Consider this scenario from Money Magazine's nationwide survey of hundreds of adults: Imagine that you are in the process of selling your home. Your neighbor, who works at city hall, tells you that the city council is about to consider putting the phone and power lines in the neighborhood underground. If the project goes forward, it will make your neighborhood more attractive, but it will also require assessing each homeowner about $25,000. Would you tell prospective buyers that they might be faced with a $25,000 assessment if they buy your home?
Here's how participants answered the question:
Yes, I would tell them: 60%
No, I would not: 40%
Our answer: There are many things sellers can keep to themselves, but a real possibility of a five-figure assessment isn’t one of them. So unless the neighbor is an unreliable gossip or there’s a reason to believe the city council is only toying with the idea of putting lines underground, the sellers are obligated to explain the situation to serious would-be buyers. After all, you can bet those sellers would want the person they buy their next home from to be just as forthcoming.
I answered the original question with a "yes, I'd tell 'em."
There'd be nothing unethical in explaining that this was an opinion of one person who worked for the City, however, even if it was true, an area improvement would raise the value of their new home !
You have an obligation to tell your buyer hidden defects in the condition of your house, like if the walls are rotting. You are under no obligation to share your insights into city politics or any other subject; the buyer is free to do his own research, or at least ask the seller.
If it was a foreigner moving to the U.S., would the seller be obligated to share his insights on the future of the Social Security system? Of course not.
As far as the $25,000 assessment goes, the question says "is about to consider". They haven't made the decision to do this and there is no guarantee it will go through. As stated, it sounds like the city council is only toying with the idea. I don't think you are under an obligation to tell them. If the city council had already held hearings, if they had passed a law or resolution of some kind, or there was other concrete action taken on this, then you would be obligated to tell them. Frankly, once the rest of the neighbors who are staying find out that they will all have to pay $25K each for these changes, unless it's an extremely expensive and rich neighborhood, this change has a good chance of not going through because people will be up in arms about it!
You should tell the buyer all the facts exactly as they are.
If you don't you are lying and are guilty of failing to disclose.
There is a reason why in court you have to say, "I swear to tell the truth, the whole truth and nothing but the truth." You are required to tell "the whole truth". The same applies here.