CUTTING INTO CAVEAT EMPTOR: SELLERS BEWARE OF PROPERTY CONDITION DISCLOSURE STATEMENTS
In a real estate transaction, New York State Real Property Law §462 requires that a seller of a single-family home, save for certain situations, provide a document known as a Property Condition Disclosure Statement (“PCDS”). This is a list of 48 questions about the premises that the owner is selling that the seller completes and signs to their actual knowledge about the condition of the premises, how different systems at the property function, describing the physical condition of the property and any issues that they are aware of with respect to the property. This document is provided to a potential purchaser to provide further information about the property as they review it and make a decision whether they would like to purchase the property.
This document is routinely provided in Upstate New York legal practice relating to real transactions. While the consequences “on the books” for not providing this document are a $500.00 credit to the purchaser at the time of closing, many prospective purchasers and their real estate agents, in effect, raise an eyebrow and express some concern when a seller does not provide a PCDS about their property and are otherwise required to by law. In short, if there is a significant issue that the seller does not want to disclose about the property, $500.00 is often a small penalty to pay to not broadcast this information via the PCDS to a prospective purchaser.
The practice of providing a PCDS in Upstate New York, at least in northeastern Upstate New York, is not followed throughout the State. We have found that frequently, New York City and New York Metro Area and Long Island sellers do not provide a PCDS, and it is routine for that $500.00 credit to be provided at closing.
The PCDS is extremely important for any sellers to take seriously. In the event that there is some indication or finding that the information contained on the document is false and that the seller knew about this, it can lead to litigation amongst the parties. For instance, if a seller knew there was significant water damage to the property and chose not to have it repaired, but indicated on the PCDS that there was no water damage to the premises and the seller had posted on Facebook about the pool of water in his or her basement following broken pipes from a cold night when his or her oil tank ran out of fuel, this would be good evidence that the seller misrepresented themselves on the PCDS. Damages to the purchaser would likely be recoverable both in a breach of contract action and in an action specifically under RPP §462.
We have successfully handled litigation in this realm previously with a seller having been found to misrepresent themselves on a PCDS. The attorneys at Flink Maswick Law know firsthand the importance of this document. It can seem like a simple, ministerial step in a real estate transaction, but it is of significant importance to make sure that all of the information contained on the document is correct. This is why we always review this document as part of our due diligence with a seller or potential purchaser of real property. If you know someone who is buying or selling real property and seeking counsel to assist with the process, please don’t hesitate to have them give us a call. We will review the important documents with them to make sure all is correct moving forward.
