Caveat emptor — "Let the buyer beware" — was the routine legal doctrine that applied in real estate property transactions in the early 1900s.
Under this theory, the seller was not obligated to reveal all that he or she knew about a property; rather, the buyer was under a duty to inquire and investigate. That legal doctrine has been battered by case law in most jurisdictions. Today, sellers are obligated to disclose existing defects relating to the value or desirability of a property.
Since a home is the largest single investment that most people make in a lifetime, it's important that all relevant information regarding its condition be provided to prospective purchasers. The seller, who is frequently also the occupant, is in a superior position to the real estate agent to provide information relating to the condition of the property.
Disclosure forms are used to communicate information of which the seller is aware to prospective purchasers regarding the property. By doing so, there should be no surprises to the buyer after the closing. The purpose of disclosure is to inform prospective purchasers of the condition of the property at the time of sale. Effective use of these forms results in individuals being more knowledgeable about pertinent items in the real estate transaction.
The Pennsylvania Real Estate Seller Disclosure Law applies to all residential real estate transfers except in:
· transfers from a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship or trust;
· transfers of new residential construction that has not been previously occupied.
The law applies to the transfer of interest in real estate of up to four residential dwelling units, whether by sale, exchange, installment sales contract and lease with an option to purchase, grant or transfer of interest of unit in a residential condominium cooperative.
Sellers who intend to transfer any interest in real property will complete all the appropriate items in a property disclosure statement, and deliver to the buyer a signed and dated copy prior to the signing of a written agreement of sale by the seller and prospective buyer. All this would be subject to the satisfaction of any negotiated contingencies.
It would require the prospective buyer to accept a transfer of the property.
A seller must disclose to a buyer all known material defects that are not readily observable. The disclosure statement is designed to assist the seller in complying with the disclosure requirements and to assist the buyer in evaluating the property being considered.
The 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. The 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 conditions of the property that may not be included in the statement. This statement does not relieve the seller of the obligation to disclose a material defect that may not be addressed on the form.
The seller's delivery of the property disclosure statement to the buyer would be by personal delivery; first-class mail; certified mail, return-receipt requested; or facsimile transmission to the buyer or the buyer's agent. The seller is not obligated to make any specific investigation or inquiry in an effort to complete the disclosure statement.
A seller would not be liable for any error, inaccuracy or omission of any information delivered pursuant to the law if:
· the seller had no knowledge of the error, inaccuracy or omission;
· the error, inaccuracy or omission was based on a reasonable belief that a material defect or other matter not disclosed had been corrected;
· the error, inaccuracy or omission was based on information provided by a public agency, home inspector, contractor, or person registered or licensed about matters within the scope of the agency's jurisdiction, or such other person's occupation and the seller had no knowledge of the error, inaccuracy or omission.
Ask Before Closing
So what does all this mean to you?
With ever-increasing mandatory disclosure obligations being placed on sellers of real estate, it can be difficult to keep up with new requirements.
The law requires a seller to provide prospective buyers with a written disclosure statement covering such items as structural defects and modifications, possible easements and other material facts that may affect the buyer's decision in a transaction.
As for lead-paint disclosures: The law requires both sellers and lesser to disclose known lead hazards by providing an informational booklet and a disclosure form as addenda to the purchase contract or lease. The federal lead-paint disclosures apply to leases and sales of residential property, including mobile homes, constructed before 1978.
Andrew Lasner is Realtor and a senior real estate specialist at Keller Williams Preferred in Newtown. He can be reached at 215-860-0800 or e-mailed at: Andrew1 @comcast.net.