PROPERTY CONDITION DISCLOSURE STATEMENT
BY
MICHAEL J. LOMBARDO, ESQ.
New York State requires most sellers of real property containing
residential units to provide the purchaser with a Property Condition Disclosure
Statement ("PCDS"). The PCDS must be completed and provided to the purchaser prior to
the purchaser signing a contract with the seller. Highlights of the Property Condition Disclosure Act ("Act"), although not an exhaustive discussion
of the rights, obligations or liabilities of either a seller or purchaser of
residential real estate covered by the Act,
are as follows:
APPLICATION
The Act applies to
all “...real property
improved by a 1 to 4 family dwelling used or occupied, or intended to be used
or occupied, wholly or partly, as the home or residence of one or
more persons...” (emphasis added). Given the definition of “Residential Real
Property” in the statute, it would appear to apply to properties which are part
residential and part commercial (e.g. if there is one or more apartments above
a store). However, it does not apply to
condominiums or unimproved land on which a dwelling is to be constructed.
The statute applies whether the
transaction is effectuated by a contract, lease with an option to buy, or an
installment sale agreement.
WHAT THE LAW IS NOT INTENDED TO DO
The law is not intended to diminish the responsibility of purchasers to
have a home inspection or to conduct other investigations or examinations. The law is intended to supplement these
procedures. It also does not prevent the
parties from entering into contracts whereby the purchaser is purchasing the
property in “as is” condition, nor does it prevent the parties from entering
into any other agreement with respect to the physical condition of the
property.
DISCLOSURES TO BE MADE
The statute
provides for the form of a
Property Condition Disclosure Statement to be used. The New York Department of State has made a
form available on its website (you can obtain a copy by clicking on "Property Condition Disclosure Statement Form".
TIMING OF DISCLOSURE
The
seller must complete and sign a PCDS and
deliver it, or a copy of it, to the purchaser or purchaser’s agent before the
purchaser signs a contract for the property, and a copy, as signed by both the
seller and purchaser, must be attached to the contract. If the seller acquires knowledge
which renders a PCDS materially inaccurate,
the seller must provide the purchaser with a revised one as soon as
practicable. However, a new one need not
be provided after the earlier of (A) closing, or (B) purchaser’s occupancy.
WHEN PCDS IS NOT REQUIRED
A PCDS is not required in connection with certain transfers which are, under
the statute, designated as exempt. Some
(but not all) of these are as follows:
- Transfer by deed in lieu of foreclosure
- Transfer pursuant to a foreclosure sale
- Transfer
by a mortgagee who has acquired the property pursuant to a deed in lieu of
foreclosure or at a foreclosure sale.
- Transfer
by a fiduciary in the course of the administration of the decedent’s estate.
- Transfer from one co-owner to one or more other co-owners.
- Transfer to a spouse or children.
- Transfer pursuant to a divorce.
AVAILABLE REMEDIES
If the seller fails to timely provide a PCDS when one is required, the purchaser is entitled to a credit at closing of $500. If the
seller provides a Property Condition Disclosure Statement or provides or fails
to provide a revised Property Condition Disclosure Statement, in addition to
any other equitable or statutory remedy the purchaser may have, the seller is
liable for the actual damages suffered by the purchaser.
OBLIGATIONS OF REALTOR
The listing realtor must inform a seller of
the seller’s obligation under the statute. The purchaser’s agent, or if the purchaser does not have an agent, the
seller’s agent dealing with the purchaser, must inform the purchaser of the
purchaser’s rights and obligations under the statute.
The above is not intended to be an exhaustive discussion
of the rights, obligations or liabilities of either a seller or purchaser of
residential real estate covered by the Property Condition Disclosure Act.
CAUTION: THIS ARTICLE IS INTENDED TO PRESENT GENERAL
INFORMATION AND IS NOT INTENDED TO BE A SUBSTITUTE FOR CONSULTATION WITH LEGAL
COUNSEL.
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Last Update: March 3, 2013