Capital Region Legal News

Tuesday, September 20, 2016

The Importance of Disclosure in Real Estate Sales

What information must be disclosed by a seller of real estate in New York State?

Whether the sellers or buyers of real estate property use brokers or not, both need to be aware of which flaws or defects must be disclosed to the potential buyer. Part of the process of real estate purchase involves appraisals, inspection reports, and surveys, so presumably the buyer and his or her broker become familiar with any problems with the property. Even so, the question remains: Do one or both of the brokers have to notify the buyer about any known defects, or take investigative action to uncover such defects and report them?

The answers to these and other real estate questions involving legal matters are never as simple as they appear. This is why it is essential that you consult with a well-established, knowledgeable real estate attorney familiar with your area before buying or selling property in the Capital Region.

Limitations to the Listing Broker's Requirement to Reveal Defects

Traditionally, New York courts adhere to the rule of caveat emptor ("let the buyer beware"), meaning that the buyer has full responsibility for inspecting the property carefully and finding any defects; listing brokers are not required to disclose such information.

Nonetheless, if the listing broker knowingly passes false information to the buyer, omitting facts concerning property defects that would have changed the buyer's decision to make the purchase, the listing broker may be liable to the buyer for damages. Since some changes in real estate law in 2002, when the Property Condition Disclosure Act (PCDA) was passed, more disclosure requirements have been added to real estate regulations.

Listing Broker’s Disclosure Requirements under the PCDA

The listing broker is required to advise the seller about the disclosure requirements contained in the PCDA before the buyer signs the real estate purchase contract. The listing broker will usually provide a blank disclosure statement form for the seller to complete, although this is not a legal requirement. A listing broker who does not disclose the PDCA elements to the seller can be held liable of a violation. In fact, New York real estate brokers and agents who engage in fraud or, dishonest or misleading advertising may face fines or license revocation. Also, if the broker uses any statement of the seller’s in marketing or advertising, it is the responsibility of the listing broker to verify the truth of the statement before publication.

"Stigmatized Properties"

During the early 1990s, a controversy arose over "stigmatized properties," the sale of which was adversely affected by perceived defects that had no real effect on the properties themselves. These perceived defects included suspected dangers from houses whose former occupants had diseases like HIV or AIDS that were clearly not transmissible through the dwelling. They also included properties in which a suicide, a homicide or other felony (or even a simple death) had occurred. The superstitious reasoning behind these "defects" was done away with by a real estate property law enacted in 1995 which ruled that such incidents need not be revealed by the sellers or their agents.

If you are planning to buy or sell real estate in the Capital Region of New York State, please consult with the excellent attorneys at Ianniello Anderson. We serve clients in the Albany, Clifton Park, Glens Falls, Saratoga Springs, Troy, and the entire Northeastern NY areas and can be reached at (518) 350.7755.

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