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What do you have to disclose when selling a property?

| Jul 6, 2020 | Firm News

For many years, home buyers in New York didn’t have much recourse under its “caveat emptor” rules, also known by the phrase “buyer beware.” The seller had little impetus to disclose unfavorable information about the property.

However, the law has shifted, and now there are several aspects of a real estate transaction that allows the buyer some recourse and holds the seller to a higher standard.

Under state law, there are certain things a seller must disclose to a potential buyer using a property disclosure form. Mandatory disclosures under New York’s Property Condition Disclosure Act (PCDA) include:

  • Environmental implications, such as being located in a flood plain or on a wetland, near a landfill or other utility site that may excrete toxins, or containing asbestos, lead, or other toxins in the building materials.
  • Structural implications, such as a history of fire, water damage, pests, roof damage, or any other historic issues.
  • Systemic implications, such as the water quality and its source, drainage and utilities.

Sellers must also tell potential buyers basic information like the age, ownership, and cost of utilities. It is not necessary to hire an inspector, meaning only defects that are already known are subject to the law.

New York’s disclosure laws

Under the PCDA, sellers have the option of paying a $500 credit in lieu of providing disclosures to a buyer. Many sellers choose this route, considering that it’s fairly inexpensive price to pay to avoid litigation over inaccuracies. However, it’s best to speak with an attorney first to make sure there aren’t any case laws that would create liability for non-disclosure.

Another type of disclosure covers negative events relating to your home. You may tell potential buyers if your home was the site if a crime, such as murder, or an event, such as an infectious disease. While New York law does not require this type of disclosure, many real estate experts suggest providing this information to prevent potential issues with unhappy buyers.

Federal disclosure requirements

While most real estate disclosure regulations come from state laws, there are some federal rules. The most common federal disclosure item concerns lead paint. You must provide information on any known lead-based paint in your home. If you have an older home that has a construction date before 1978, you also have to allow buyers to test for lead in your home. Additionally, you must provide an EPA pamphlet about lead-based paint.

An experienced attorney can help sellers make sure all of their legal boxes are checked. Fortunately, New York’s laws are fairly lenient when it comes to property disclosures.