Kourtney and Kal are looking around for their first home in Pennsylvania. They find an ideal place in a neighborhood not far from where they both work. The area is hilly, and a large retaining wall stretches across the back of the property, bulging slightly. The property behind theirs is at least 12 feet higher. The couple will definitely want to take a close look at the disclosure form that that sellers must, under Pennsylvania law, provide to them – and also to perform further investigations of their own.
Pennsylvania law on seller disclosures requires sellers to tell prospective buyers about “material defects known to the seller.” The standard form describes a material defect as a problem with the property that would have an “adverse impact” on its value or involve an “unreasonable risk” to the buyer. Talk about phrases with a heavy legal meaning! Let’s break this down.
“Known to the seller” is probably the easiest place to start. The law does not expect the home seller to have any specialized engineering, architectural or structural background, nor to hire anyone with such a background, in order to complete the disclosure form. The seller only needs to mark the items the seller actually knows about. So if the seller knows the garbage disposal in the kitchen doesn’t work, or that the roof over the third bedroom leaks, he or she needs to note that information on the form.
But the law doesn’t require a seller to note that, for example, the foundation is cracked or that there is dry rot in the basement if he or she has no knowledge of this problem. In fact, the seller can circle “unknown” on several parts of the form.
A “material defect” includes things like a leaking roof, a termite infestation, or problems with the plumbing, HVAC, and electrical systems. “Unreasonable” risk means a problem with the property that could create the possibility of injury or death. Some examples: contaminated fill in the yard or a home subject to the Mine Subsidence Act that may not have proper underground support. More common examples might include a loose step or board or a spot in the yard where someone could easily fall and be injured.
The seller must deliver the completed and signed Real Estate Seller Disclosure Act Form to the buyer prior to the completion of the sales transaction.
The form specifically covers the following systems or parts of the home:
If you buy the house from the estate, trust, or conservatorship of a person who has died, the seller in that case is not required to complete a disclosure. That makes sense given that the person or entity transferring the property may have very little idea of its physical condition.
New homes are covered under a separate part of the Pennsylvania statutes, and are not specifically covered under this part of the law.
If you're buying a home, here are some tips to protect against the possibility that the seller hasn’t completely or accurately filled out the disclosure form, or didn’t know about existing problems.
First, when looking at the property prior to making an offer, keep an eye out for visible problems, such as the bulging retaining wall observed by Kourtney and Kal. Are there cracks in the walls? Water marks on the ceilings? A damp or musty smell? Do you see any obvious evidence of termites or other pests?
You may also want to check simple things – turn on the water, flip the light switches, and look at the furnace and the water heater to see what year is on the sticker. Use that same advice for any appliances included in the sale.
Outside the home, check the yard and the exterior of the structure. You don't need to be an expert – you are just looking for potential problems to ask others about. Write them down while you remember them and compare them to the Seller’s Disclosure when you receive it. You can also follow up with questions to the seller’s real estate broker.
Another tip is to get a professional home inspection. The home inspector will examine the property and create a written report advising you of its problems before the sale closes. This is particularly recommended if you are buying a home from a seller who is excepted from the disclosure rules. For more information, see "Getting a Home Inspection."