Property Condition Disclosure Statement

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.

Last Update: March 3, 2013