Before 2002 (the effective date of the Property Condition Disclosure Act (N.Y. Real Prop. Law §§ 460-467) (thePCDA), New York sellers did not have to disclose most property defects or potentially dangerous conditions to buyers. The general law in New York then was "caveat emptor" or "let the buyer beware."
Back then, the buyer was expected to hire a professional inspector to discover home defects before finalizing the home purchase. The seller was potentially liable only for failure to disclose conditions that a professional inspector was unlikely to find during a reasonable home inspection.
Fortunately, the legal landscape has since changed, as discussed in this article. It’s helpful to keep this background in mind, however, given that in the not-so-distant past, sellers felt free to say nothing to buyers about the physical problems within and around their house.
Today, New York home sellers are required to complete a standardized disclosure form answering a series of questions about the property. The form is available from the seller's, or "listing" agent, who is supposed to inform both the seller and the buyer (if not represented by a buyer's broker) about the law. The New York disclosure formcan also be found on the New York Department of State website.
There is, however, an exception to the disclosure requirement for a home sale. The seller can opt to give the buyer a $500 credit at closing in lieu of making the disclosures.
For further information about the seller’s obligations under the PCDA, see Nolo’s Article, “New York State Home Sellers: Disclosures Required Under State Law."
What Buyers Can Expect the Seller to Disclose
The disclosure form contains 48 questions about the property. The questions are divided into four separate categories: 1) general information, 2) environmental, 3) structural, and 4) mechanical systems and services.
To answer the disclosure form questions, the seller checks off the appropriate adjoining box for "yes," "no," "unknown," or "not applicable," and explains all existing defects or unsafe conditions in the extra space provided or on a separate, attached sheet.
From the answers on the disclosure form, the buyer will learn about:
- the property's age
- the length of the seller's occupancy and ownership
- utility surcharges
- existing flood plains, wetlands, and agricultural districts
- nearby landfills
- existing issues regarding asbestos, lead pipes, or fuel storage tanks
- the results of any recent radon tests performed on the property
- spilled petroleum products, or other spills or leaks of hazardous or toxic substances
- water, fire, smoke, or insect damage
- the condition of the roof, and other mechanical systems and services
- the types, quality, and sources of utilities, water, sewers, and drainage, and
- the property's flooding history.
If the disclosure form fails to cover potential defects that you, the buyer, saw during your own visits to the property, you should ask your agent to follow up with the listing agent to find out more. You may give a copy of the disclosure form to your inspector for a more detailed examination and explanation of listed defects. You should also forward a copy of the disclosure to your attorney, before the close of any attorney approval period in the contract. That way, payment for the cost of repairs or replacements will be included in the contract negotiations.
What the Seller’s Disclosure Form Will Not Tell You
Even if the seller chooses to deliver a completed disclosure form to you, rather than give you the $500 closing credit, you should not expect each and every defect to be disclosed. The seller is not required to disclose the following types of physical defects or conditions on or near the property:
- defects not within the seller’s actual knowledge, even if the seller should have known about them
- past defects that the seller reasonably believes have been adequately repaired
- conditions on neighboring property that could adversely affect the property
- defects that are not “material” — that is, small or cosmetic defects unlikely to significantly affect the value or safety of the property, and
- past uses of the property that could make certain defects more likely.
This illustrates the importance of getting a home inspection. After living in a home for a period of years, sellers often become blind to problems there. What’s more, seemingly cosmetic defects, such as a crack in façade brickwork, can be an indicator of deeper problems, such as structural defects.
Also, a New York seller does not have to disclose information about a death or notorious crime that has occurred on the property, or information about a prior owner having AIDS or any other contagious disease, or the identity or location of any neighbor who may be a registered sex offender.
You can often uncover information about past crimes on the property through an Internet search of the property’s address. You can find the location of registered sex offenders living near the property via the New York stateMegan’s law website.
Resources for Learning More About the Property
Consulting a wide variety of resources regarding your property is a good idea. Your agent, the listing agent, your professional inspector, units of local government, neighbors, and even news sources can all be helpful in augmenting (or replacing) the information you receive from seller disclosures.
Your inspector will give you a written report about the property detailing defects found by room and in a variety of categories, including:
- roofing, chimneys, and attic
- heating, ventilation, and air conditioning
- plumbing systems
- electrical systems
- structural components
- appliances, and
- exterior and foundation.
The inspector may recommend additional, more specialized inspections for potential structural or systemic systems requiring special knowledge, skill, or a specific type of license.
Neighbors can also be an excellent source of information about the property. A neighbor may have seen repair trucks recently on the property, survived a storm or a flood that affected the neighborhood, or know about an occurrence on the property the seller is not required to disclose, as described above. Also consult the local building department for information about past applications for construction, or repair permits.
You may wish to consult with an experienced local real estate attorney for more information about the disclosures required under the PCDA, seller’s liability for home defects, or further actions to take when buying your new home.