The importance of Disclosure Law (Part 2 of 2)
In last week’s article called Buyer Beware, we looked at a dream home that had more than a view, but a slew of major issues discovered during a home inspection: Radon, Septic and a mold-like substance. This brings us back to the Seller’s obligation and disclosure.
While the Seller in this case may not have known about the issues discovered in the home inspection, once it’s found, it becomes important to disclose them to future buyers.
Seller’s Disclosure is crucial and varies by state. In Pennsylvania, the law states the Sellers disclose and that’s done through the Seller’s Disclosure form. The form used is the Seller’s Property Disclosure Statement.
Here’s a segment of the PA Code for Sellers:
“A seller must disclose to a buyer all known material defects about property being sold that are not readily observable. This disclosure statement is designed to assist the seller in complying with disclosure requirements and to assist the buyer in evaluating the property being considered.
This statement discloses the seller’s knowledge of the condition of the property as of the date signed by the seller and is not a substitute for any inspections or warranties that the buyer may wish to obtain. This statement is not a warranty of any kind by the seller or a warranty or representation by any listing real estate broker, any selling real estate broker or their agents. The buyer is encouraged to address concerns about the condition of the property that may not be included in this statement. This statement does not relieve the seller of the obligation to disclose a material defect that may not be addressed on this form.
A material defect is a problem with the property or any portion of it that would have a significant adverse impact on the value of the residential real property or that involves an unreasonable risk to people on the land. The fact that a structural element, system or subsystem is near, at or beyond the end of its normal useful life is not by itself a material defect.”
SOURCE: § 35.335a. PA – Seller property disclosure statement
In this situation, the Sellers Disclosure changes upon discovery of this information. When the Buyer shares the inspection report(s) with a Seller, the Seller is now knowledgeable. The Seller’s Agent may also be knowledgeable after an inspection when reports are shared. It creates an obligation for the agent to have their Seller update the Seller’s Disclosure.
“The seller alone is responsible for the accuracy of the information contained in this statement. The seller shall cause the buyer to be notified in writing of any information supplied on this form that is rendered inaccurate by a change in the condition of the property following the completion of this form.”
Sellers, if you find your property has Radon, Water, Termite, Mold, other environmental issues, defects, etc – you MUST disclose. Other issues that developed over your ownership, disclose. An issue that was corrected in the past, disclose. And it’s VERY important to disclose IF new conditions are discovered as in the case an inspection report reveals new information where a current buyer in contract breaks or releases the agreement of sale. The future Buyer needs to know this discovery and any corrections made since the inspection.
Always consult the PA Code and a qualified real estate attorney. Sellers Disclose, Buyer Beware.
Sellers: Disclose, Disclose, Disclose!
Buyers: Caveat Emptor – Buyer Beware!