Much has been written about the need for disclosure in real estate transactions. In this instance I'm addressing the need for a seller to disclose property condition.
Some agents inadvertently allow a seller to skirt their responsibility. I'm not suggesting that agents are culpable or assist non-compliance.
I am suggesting they don't fully understand the law, or that a sellers disclosure might have to be amended during the listing contract.
In Pa a Sellers Disclosure is required on all residential real estate transactions.
Pa law exempts certain classifications of individuals from the disclosure responsibility. There are 9 exemptions:
- Banks (foreclosed properties)
- Fiduciary - Estates
- Court Order
- Co-Owner transfers
- Transfers made to testate or intestate successions
- Transfers made to a spouse, or to a person or persons in the lineal line of consanguinity
- Transfer to or from a Governmental agency
- Transfers from an entity that has taken title to residential real property for the purpose of assisting in the relocation of the seller.
- New Construction
Many times inexperienced agents, or those not conversant with the law allow sellers to cajole them. It's easy to allow a seller to escape the requirement if you can justify to yourself they HAVE NO KNOWLEDGE. Not having knowledge is not one of the 9 exemptions.
Situation number one:
Seller lists property and completes a sellers disclosure. During the listing the seller notifies the listing agent to suspend showings because his basement flooded.
Seller repairs condition and installs sump pump. Listing agent does not have seller Seller amend the original sellers disclosures.
Situation number two:
Property is listed by an heir who had not lived in the property. No sellers disclosure was completed. Seller accepts a contract on the property and inspections take place.
The septic is found to be inoperable by the sewer authority of the township. Seller and buyer cannot come to terms on the repair and contract is canceled.
Several months go by and the property is re-listed with the same listing agent. Septic was covered over, never replaced and no amended disclosure was completed.
Situation number three:
An investor purchased a home in a vacation community during boom times and rented it out. He has owned it for 10 years.
He is now marketing the property without a sellers disclosure. The listing agent says that is perfectly fine because the owner never lived there.
He may not have lived there, but certainly after 10 years of ownership he knows the last time the furnace was serviced or if the roof was replaced.
- As a matter of practice we have every seller complete a sellers disclosure. There is a provision for a seller to refuse and sign that they have refused. Obviously this is a red flag to a buyers agent.
- If the property is an estate have the Executor x out all copies and sign as Executor. A note on the form that the Executor has no knowledge should be included.
If a question ever arises later, the listing agent has documentation supplied by the seller. CYA. It's your license and your livelihood. Don't be drawn into the justification game with the seller.
- Should something go awry later the listing agent will surely be part of litigation. While the listing agent may not be sued, they well may find themselves a star witness.
In situation number one and two the listing agent had knowledge. Under Pa Law the listing or buyers agent has a duty to disclose. "§ 35.284a(c) and (d)—Seller's agents and buyers agents are required to disclose known defects but are not required to make independent inspection"
- If you represent a seller and later HAVE KNOWLEDGE of defects you have two choices in my humble opinion. Require that the seller disclose by amending the sellers disclosure. If they refuse go to your Broker and make them aware that the seller is attempting to hide a material defect. Follow up with an email to the Broker confirming the verbal conversation so you have record you did inform your Broker.
In a recent opinion from Doug Marsico, Esq. legal counsel for PAR, Attorney Marsico actually addresses situation number three that of a non-occupant owner. It's an interesting read. Sellers Disclosure Opinion
As an aside, all three of these situations are first hand. The most recent happened last week. Listing agents are at risk unless they get firm with the seller. Consider the possible ramifications before you put yourself in harms way.