Over the course of many years, the state of New York espoused something of a “buyer beware” position when considering the purchase of residential real estate. That markedly changed in 2002 when the Legislature passed and the Governor signed into law the Property Condition Disclosure Act. The law established specific disclosure requirements for a residential home seller.
Four general New York seller disclosure categories
Under the law, a seller must respond truthfully to questions about the status and condition of residential real estate before a buyer formally makes on offer on the premises. These questions are generally categorized into four broad categories:
- General information about such matters as the age of the structure and average utility expenses
- Environmental information, including a history of radon testing, whether the premises have been exposed to toxic substances or if the property is located on a floodplain
- Structural information, including disclosures about fire, water or smoke damage, roof integrity and insect infestation issues
- Mechanical information about the performance of water system, the presence of drainage complications, and the identification of flooding issues
Penalties for failing to disclose
If a home seller fails to make certain disclosures required by law, a home buyer who purchases the residence may be in a position to pursue legal action for financial compensation. A home seller must disclose any requested information known about or that reasonably should have been known.
The law provides sellers something of an “out” when it comes to making disclosures. If a home seller elects not to answer one or more of the 48 questions on the disclosure form, that individual can do so by reducing the agreed price of the property by $500 for each incident.