Imagine that you want to purchase a house, condominium unit, or parcel of land in Alaska. For all of the many mysteries of the Last Frontier, one of the biggest questions on your mind might be the condition of the property you seek to buy.
How do you know that the house is solid? How do you know whether the land behind the home floods regularly? How do you know whether the heat works during those cold winters? Fortunately, Alaska law requires that the seller gives potential buyers a lengthy disclosure statement to put you on notice of any such defects. What disclosures are you entitled to receive from the Alaska home seller, and what form will they take?
The key statute on this subject is Alaska Stat. 34.70 et seq., which covers disclosure requirements for home sellers. The statute provides: “Before the transferee of an interest in residential real property makes a written offer, the transferor shall deliver by mail or in person a completed written disclosure statement….”
In other words, before you make a written offer on the home indicating that you will purchase it for a particular price, the seller must deliver to you the disclosure statement.
The obligation to give you a disclosure statement applies not just to home sales, but also to exchanges of land (that is, trades of one parcel for another) and leases where you have the option to purchase the property at the end of the lease term.
The statute charges Alaska’s Department of Commerce, Community and Economic Development (“DCCED”) with the job of determining exactly what the seller must tell you. DCCED has created a sample form that is typically used by sellers.
This nine-page form asks the Alaska home seller to disclose whether various defects exist on dozens of locations on the property, by checking boxes related to various categories of home features. These range from the roof to the floors to the hot water heaters. Alaska’s form is extremely comprehensive! Indeed, sellers are also encouraged to further explain any defects, on the addendum page.
Sellers are also required to estimate monthly utility costs for gas, electric, oil, propane, wood, coal, water, sewer, and/or refuse. This sort of requirement is unusual, but you should be grateful; it will allow you to get a relatively comprehensive snapshot of your monthly costs beyond your mortgage payments.
You will notice that both you and the seller must sign the form, to prove that it has been given and received. Obviously, you should retain a copy of the form for your records. (Imagine a situation where the water main bursts as soon as you close on the house; you might want to check to see whether the seller disclosed any issues with respect to the pipes, or whether the issue was perhaps fraudulently concealed).
As a homebuyer in Alaska, you are lucky that your state has enacted some of the most buyer-friendly laws in the country. The state not only requires that sellers give you these comprehensive disclosures, but also gives you the ability to rescind any agreements to buy the property if the seller fails to fully comply. Under Alaska Stat. 34.70.20, if a disclosure statement is given to you after you make a written offer (rather than before), you “may terminate the offer by delivering a written notice of termination… within three days….”
Moreover, Alaska provides strict penalties for sellers who violate the disclosure requirements. Alaska Stat. 34.70.90notes that a seller who willfully violates this chapter or fails to perform a duty it requires is liable to you for up to three times the actual damages suffered as a result (such as the cost of repairing the defect).
Nevertheless, even with these strong incentives, some sellers will lie or omit defects from their disclosures in order to make a quick sale. The last thing you want is to chase your seller around with litigation after closing, especially if the seller leaves the state. You are far better off making sure that the home has no defects (or at least minimal defects) before you buy.
With that in mind, you should invest in a home inspection. Inspections are generally conducted by licensed professionals with a background in construction or engineering who physically examine the property and give you a report of any problems that they see.
The inspector may use the seller’s disclosure statement as a start, but should also go beyond that statement. The inspector may uncover problems with the property that the seller purposely failed to mention or, more likely, problems that the seller simply was unaware of, even after have lived there for years. If you are buying property in Alaska, few investments are as wise as a full independent home inspection.