If you own a house, condominium unit, or parcel of land in Alaska that you want to sell, there's an important Alaska law to know about. It requires that before you actually make the transfer, you give the potential buyer a lengthy disclosure statement that you've filled out. This will put the buyer on notice of any defects with the home and prevent the buyer from nasty surprises (which could lead to lawsuits) later.
If you're selling property in the Last Frontier, what must you disclose, and how?
Alaska Stat. 34.70 et seq. broadly covers disclosure requirements for home sellers in Alaska. The statute requires that before the buyer makes a written offer for the property, the seller "deliver by mail or in person a completed written disclosure statement," unless the buyer and seller agree to waive this requirement.
Unlike in some states, Alaska's legislation outsources the creation of the particular disclosure requirements to the state Department of Commerce, Community and Economic Development, which has created a sample form.
The form starts with basic information, such as when the property was built and how long you've lived there. It then asks you to check boxes indicating what features your property contains (such as a garbage disposal, storage shed, security system, and so on, and then to indicate whether they have defects.
You'll also need to check boxes indicating whether structural components, such as the roof, walls, gutters, chimneys, swimming pool, and so on have known defects or malfunctions, or have had major repairs done within the last five years.
You must also list "Other items not covered," as in, defects that are not specifically asked about on the form.
Alaska's disclosure form is somewhat unique in that you are also required to estimate monthly utility costs. The form specifically lists gas, electric, oil, propane, wood, coal, water, sewer, and refuse. Again, the goal is to avoid surprises for the buyer after the closing.
Both you and the buyer will sign this form, acknowledging that it has been given and received. You must give this form before the buyer makes a formal written offer for purchase. Or, if the buyer agrees to waive the disclosure requirement, you'd use a portion of this same form to do so.
Like anyone trying to sell a house, you want the transaction to go smoothly and quickly. You might think to yourself: Why be honest in making these disclosures?
There are several important reasons for honesty. First, Alaska Stat. 34.70.20 gives buyers the ability to rescind any agreements to buy your property if you fail to fully comply. The statute provides that if a disclosure statement is delivered to the buyer after he or she has made a written offer (rather than before), the buyer "may terminate the offer by delivering a written notice of termination… within three days…." Needless to say, this can create further uncertainty during an already stressful period.
Second, sellers who violate the disclosure requirements face strict penalties. Alaska Stat. 34.70.90 notes that a seller who willfully violates this chapter or fails to perform a duty it requires is liable to the buyer for up to three times the actual damages suffered as a result. This is meant to be a punitive deterrent--and should make you think twice about any dishonesty!
Moreover, Alaska Stat. 34.70.60 mandates that disclosures be made in "good faith," which essentially means you should not try to use clever language or other such tactics to obfuscate material defects in your property.
There's a practical benefit to openness and honesty, too. A buyer who sees that you aren't hiding problems is likely to be cooperative in negotiations leading up to the closing.
Finally, disclosing a defect in your home will insulate you from legal liability. Imagine that you sell your condo in Juno to a buyer without disclosing that the bathroom has a huge outbreak of mold. A buyer who closes on your condo without having discovered the mold, moves in, and then (inevitably) finds might decide to sue you. Had you first disclosed the condition, Alaska Stat. 34.70.30 would protect you: "A transferor is not liable for a defect or other condition in the real property or the real property interest being transferred if the transferor discloses the existence of the defect or condition in the disclosure statement."
In short, while you might be tempted to not disclose various defects on your disclosure form, or give the form to the buyer at the last minute, these tactics could cause you further problems down the line.