In New York a state law took effect on March 1, 2002 which requires owners of one-to-four family residences to complete a six page 48 question disclosure form and to provide that form to a prospective buyer before entering into a contract. This law does not apply to owners of co-ops, condominiums, land and new construction. The law goes on to provide that if the owner fails to complete the property condition disclosure statement and present same to the buyer prior to the buyer signing the contract, then the seller must pay the buyer $500 at the closing for failing to comply. The types of questions asked on the form include ones like: Is lead plumbing present? What is the age of the property? Was the property ever the site of a landfill? Is there asbestos in the structure?
The law is supposed to protect buyers by providing them with a clearer picture of the condition of the property prior to purchasing. The legislature believed this would help cut down the number of lawsuits that buyers file against sellers where problems are discovered after the house is sold.
In practice however this disclosure has not served this purpose due to the fact that hardly any sellers fill out the disclosure form on the advice of their attorneys. Most attorneys, including myself, agree that filling out this disclosure only increases the seller’s exposure to liability. If an answer is not accurately filled out or is later found to be incorrectly represented as the result of a future problem the buyer has at the home, their answers could later be used against them by the buyer in a lawsuit. Buyers have the right to sue for up to 6 years after the closing for representations made in such a document. This is why almost all sellers in New York will gladly pay the mandated $500 to the buyer at the closing.
The Law Office of William J. Reinhardt, Jr. is available to advise you on your particular transaction. Call 718–377-8880 for a free consultation.
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