Caveat emptor (“buyer beware”) sums up many transactions, especially in real estate. Buying homes or other property is a major undertaking and a potentially risky venture if you don’t know what you’re doing. For instance, do you know there are certain things a seller must disclose about a property they’re putting up for sale?
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Navigating the real estate market doesn’t have to be a “fly by the seat of your pants” experience though. The right real estate attorney can walk you through what you should know about real estate disclosures. Please contact us for a free consultation to determine what you need for your real estate transaction.
By law, a seller must disclose certain aspects of a property’s history to a prospective buyer. This can cover a variety of issues and revelations, but it’s a chance for you to learn as much as possible prior to closing a sale. You see what the seller did to maintain the property. You learn about potential issues affecting the property (i.e.defective/insufficient repairs & upgrades, etc.). Disclosures also give sellers certain legal protections due to forewarning potential buyers about potential issues with the property.
There are five main areas to look at and be aware of regarding property disclosures in real estate in New York.
How should a seller make a property disclosure
What seller should disclose to potential buyer
Disclosure vs. inspection
When a buyer will receive disclosure statements
Must-have real estate disclosures in New York
We’ll go into more detail with the topics in the sections below.
What does a property disclosure document look like? Homeowner disclosure statements can be as simple as a list of yes/no answers to stock questions the seller checks off about the property. The questions and documents are often put together, in writing, by real estate companies, in a real estate disclaimer statement. The seller then goes through and answers those questions about the condition of the property, among other topics addressed in disclosure documents. Many documents are put together for the disclosure documents.
Communications (letters, emails, etc.) between the seller and previous parties about the property must also be disclosed. Sellers can be responsible for the information they reveal in disclosure documents for up to ten years. That’s why it’s important for sellers, and beneficial for you, that they be as thorough and openly honest as possible when disclosing information about their property. There can be potential penalties and legal ramifications for failure to disclose.
There are several common disclosures you tend to find in a disclosure statement from a seller. They often include:
Disclosure laws differ around the country. California has some of the strictest disclosure rules in the United States, New York once had some of the loosest disclosure laws, which were tantamount to the aforementioned “caveat emptor.” Sellers at one time did not have to disclose property defects in real estate they sold. However thanks to court cases like Laxer v. Edelman (75 A.D. 3d 584 (2d Dept. 2010).), as well as passage of the Property Condition Disclosure Act (N.Y. Real Prop. Law §§ 460-467), prospective buyers have many more protections than they used to.
Laxer v. Edelman makes a seller liable for any damages incurred to a buyer if the seller actively covered up or failed to disclose a defect that led to damage the buyer was forced to deal with. Under the PCDA, there are certain things a seller must disclose or else pay you, the buyer, $500 at closing. Many sellers prefer to pay the credit rather than disclose what is required under the PCDA. You can learn more about disclosures and misrepresentation here.
A common question buyers, and you, may ask is: do disclosures take the place of inspections? Let it be noted that disclosures are not the same things as inspections. As mentioned earlier, disclosures are a set of documents put together by the seller or the seller’s real estate company, disclosing certain details about the property. But that doesn’t mean that the seller has truthfully disclosed everything, or that the seller is aware of everything going on with the property. That is where a licensed inspector comes in. The inspector can uncover things about the property you’re interested in that were previously unknown or unnoticed. Two such common items may be mold and hidden structural issues.
The buyer will usually get the required disclosure statements once an agreement is nailed down. If the buyer finds anything not to their liking, they can say no to the deal. Some sellers will give disclosure statements before getting an offer. Being up front about any potential issues saves time and hassle if things fall apart during the close of a deal (escrow). In turn the buyer must carefully review the disclosures, ask questions about anything that isn’t clear, and then sign off on a homeowner disclosure form, indicating they understand what they’ve read. A good real estate attorney can help you navigate the contents of disclosure statements and answer any questions you have, to better help you understand what you’re reviewing. Contact one of our attorneys at Moshe’s Law for a free consultation.
There are certain disclosures required by law on a disclosure statement. These are the most important items.
Not that a seller would be intentionally deceitful about something that may be important or not quite right about a property, but that possibility exists. Home or property ownership carries certain risks, and it’s important that you have a good real estate attorney to make sure the real estate transaction goes smoothly.
Chat with, or fill out a form for an appointment with, one of Moshes Law’s qualified real estate attorneys, so we can get you started on the right path to property ownership.