New York Adopts Disclosure Form for Sale of Private Houses

Joining a nationwide trend, the New York State legislature recently passed a law requiring anyone who sells residential real estate in New York to deliver a property condition disclosure form to the buyer before the buyer signs the contract. This requirement goes into effect for all contracts of sale signed on or after March 1, 2002, and applies to all property improved by a one- to four-family dwelling. It does not apply to coops and condominiums or to unimproved property. It also will not apply to certain transactions, such as transfers under a divorce decree, foreclosures and sales by estates, nor to transfers between co-owners or between spouses. The form must be attached to the contract of sale before signing. If the seller fails to supply the disclosure form, the buyer is entitled to a $500 reduction in the price.

The Act provides that the disclosure form is not intended to be a warranty by the seller, and disclosures are based solely on the seller's actual knowledge. The seller is not required to undertake any investigation or inspection to complete the form. The Act does not change the parties' right to negotiate the condition of the property at closing (e.g., that the systems will be in working order, that the property is sold "as is," etc.). And it is not a substitute for inspections by the buyer who is encouraged to obtain an independent professional inspection and environmental tests and to review public records concerning the property. The seller may be liable for actual damages, however, for making a knowingly false or incomplete statement.

THE PROPERTY CONDITION DISCLOSURE STATEMENT

Background Information

The form first asks for background information including how long the seller has owned and/or occupied the property and the age of the structure. It also asks if there are any other people claiming an ownership interest in the property, if there are any easements and any features of the property shared in common with adjoining landowners.

Environmental

The form requires disclosure of environmental conditions and hazards. It asks if the property is located in a floodplain, designated wetland or agricultural district...