Dec
11

For what are you liable as the seller of a home?

13
Nora Devitt, law student at St. John's University School of Law and contributor to the Ross Feller Casey Blog writes about your liability as you sell a home.
- Ross Feller Casey, LLP, December 11th, 2012

Published December 11th, 2012


If there is one thing I remember from my law school contracts class, it is the phrase “caveat emptor,” which is commonly translated as “let the buyer beware.” This phrase stuck with me for several reasons. First, it’s Latin, and as a high school Latin scholar, I felt obligated to commit it to memory. Second, it was (Note: was) the underlying principle of real estate transactions. Therefore, I knew it would be on my final exam, and I had a strategy: when in doubt, rule in favor of the seller. Finally, it’s useful. Like you, I could be the “buyer” one day.

As luck would have it, the one thing I actually remember is no longer worth remembering. Today, Legislatures and Courts are placing greater duties on the part of sellers to disclose to buyers conditions affecting the buyers’ interests. In fact, almost eighty (80%) percent of the States now have some form of Property Condition Disclosure Law obligating sellers to disclose important information about the property. In accordance with these laws, some sellers even have a duty to deliver a Property Condition Disclosure Statement. For example, under Section 461 of the Real Property Law, New York sellers must deliver a Property Condition Disclosure Statement when selling residential property that is renovated from a one to four family dwelling. The Property Condition Disclosure Statements consists of forty-eight (48) questions and must be provided to the purchaser before he or she signs the lease. If the seller fails to complete the questionnaire or timely deliver the statement, he or she must pay the purchaser $500.

Interestingly, sellers do not view this fee as a penalty, but rather a choice that will decrease their exposure to liability. In other words, sellers believe that completing the Statement exposes them to greater liability. How so? Well, the mere act of obtained a signed Statement shifts the burden from the buyer to the seller. Because the buyer already exercised “proper caution,” the poignant question becomes whether the seller disclosed “all facts known to [him or her] materially affecting the value or desirability of the property.”  

The take-away: As a buyer, you should insist upon the completion of a Property Condition Disclosure Statement from a seller reluctant to buy one. Moreover, do not waive your inspection rights. You may be the “successful” bidder in the short-term, but you also risk becoming the homeowner with no recourse when costly termite damage or leaky plumbing is later discovered. 

Tags: homeowner | liability | | | |


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