For most people, buying a home is one of the most significant financial decisions they will ever make.This is particularly true in the District of Columbia, where home values are at all-time highs. Given these pressures, buyers want to be secure in their purchases. If you are considering purchasing a home or condo in DC, you want to be sure of the quality of the property. Do the lights work? Are their leaks? What about the shower?
Since 1998, home sellers in Washington, DC have been required to make certain mandatory disclosures to potential buyers. What are those requirements, and what should you pay particularly close attention to?
D.C. Municipal Regulations 17-2708 requires the seller to make certain explicit disclosures of home defects to potential buyers. These disclosures must be made before you sign the purchase contract. DC sellers commonly use the disclosure form found on the Secretary of the District of Columbia website (which also includes the full text of the Regulation).
Take a look at the sample form. You’ll see that the sellers must tell you some basic factual information first. How long have they owned the property? How long have they actually lived there? Importantly, the sellers must also state whether the property is a DC landmark or designated in a historic property or neighborhood. (Because of its unique role as the nation’s capital, DC has strict rules regarding renovations to such buildings, which you would absolutely want to know about before purchasing the property.)
The form then asks a series of questions about a variety of property conditions. Looking at just the first few, the seller must state “Yes” or “No” as to whether he or she has “actual knowledge” of any defects with the heating system (Question #1), air conditioning system (Question #2), plumbing system (Question #3) and electrical system (Question #4). The seller must also disclose any actual knowledge of defects with a whole range of appliances--about two dozen-- from the microwave to the ceiling fan.
The fact that the seller checks a "No" box on the form doesn't necessarily mean that there's no problem. Notice that essentially every question on the form asks the seller to disclose defects within his or her “actual knowledge.” What exactly does this mean?
Simply stated, the seller needs only tell you about defects in the home about which he or she actually knows. DC does not place any duty to investigate potential defects on the seller. In other words, the seller does not need to hire an inspector to make sure that the plumbing works. If the seller has lived in the home and doesn’t know for a fact that there’s an issue with the plumbing, that alone is enough reason to mark “No” on Question #3.
Common sense should tell you that it would be very difficult to prove whether a seller actually knew of a defect or not. If the disclosure form states that the seller has no knowledge of any plumbing issues, but one of the basement toilets always seems to clog after you move in, how on earth would you ever be able to establish that the seller blatantly lied on the form? (It would, of course, be much easier if the seller denied knowledge of a major defect, for example ignoring a large hole in the roof that caused significant leakage whenever it rained.)
As you’ll see from the very first page, DC emphasizes (in all capital letters) that “THIS STATEMENT IS NOT A WARRANTY OF ANY KIND BY THE SELLER… AND IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THE BUYER MAY WISH TO OBTAIN.”
In other words, you are highly encouraged not to rely on the statements in the disclosure form. This is not necessarily because the seller might purposefully lie; although this, too, is possible; but rather, because the seller could fill out the form in good faith and simply lack awareness of important defects in the home.
Thus, as a smart buyer, you should hire your own inspector to review the home’s condition before signing a contract. As another famous Washington resident once said, “Trust but verify.”