Chicago Title History    |   Story of Our Logo    |    Mortgage Rate Calculator   |    Online Brochures   |    How to Choose a Title Company
Recommended Practices    |   Library of Real Estate Forms for NYS    |   Informational Articles For Attorneys
ACRIS 2.1    |    Preparation of ACRIS Forms    |    TIRSA Endorsements    |    NYS Branch Directory    |    Order A Title Search
National Forms & Information    |    Title Rate Calculator   |    Mortgage Rate Calculator
EC Purchasing - (Log--in)    |   IPX 1031    |   Attorneys need CLE Credits?

Legal Research Library   >   Property Condition Disclosure Act

Property Condition Disclosure Act
By Bernard M. Rifkin

Back To The Legal Research Library

The Property Condition Disclosure Act, recently signed into law by Governor Pataki, adds a new Article 14 to the Real Property Law, requiring sellers of one to four family residential real property to provide a written statement to prospective purchasers, disclosing all known defects relating to the property and the dwellings thereon. The Act will become effective on March 1, 2002. Every seller of residential property must complete and sign the property condition disclosure statement and deliver a copy to the purchaser (or purchaser's agent) prior to the execution of a binding contract of sale. The act provides for the form and content of the property condition disclosure statement and requires the seller to answer all questions based upon their actual knowledge. It further requires that a copy of the disclosure statement, signed by both seller and purchaser, shall be attached to the contract of sale. Notwithstanding the requirements of the new statute, it is not intended to prevent parties from entering into agreements relating to the physical condition of property to be sold, including but not limited to the sale of real property "as is". The property condition disclosure statement is applicable to all real property improved by a 1 to 4 family dwelling used or intended to be used as the home or residence, in whole or in part, of one or more persons. However, it does not apply to the following property:

1. unimproved property on which dwellings are to be constructed,
2. condominium or cooperative apartment units, or
3. property in a homeowner's association that is not owned in fee simple by the seller.

In addition, certain types of transactions are exempt from the application of the Act. Accordingly, a property condition disclosure statement is not required in connection with transfers made:

1. pursuant to court order;
2. in lieu of foreclosure;
3. to a beneficiary of a deed of trust;
4. pursuant to a foreclosure action;
5. pursuant to a power of sale following a default in the satisfaction of an obligation secured by a mortgage;
6. by a mortgagee or an agent or affiliate thereof who acquired the property by deed in lieu of foreclosure;
7. by fiduciaries;
8. by one co-owner to one or more co-owners;
9. between spouses or former spouses pursuant to divorce decree;
10. to or from a governmental entity;
11. in connection with newly constructed housing;
12. by a sheriff; and
13. pursuant to a partition action.

The willful failure to comply with the disclosure requirements of the Act could render the seller liable for actual damages suffered by a buyer in addition to any other statutory or equitable remedy. However, the statute does provide the seller with a remedy. In the event that a seller fails to deliver the disclosure statement as required he must give the buyer a $500 credit against the purchase price upon transfer of title. The credit will be in lieu of compliance with the disclosure requirement.

Attorneys may want to consider a number of alternatives with respect to complying with the Property Condition Disclosure Act. Where the attorney's client is the seller, he (she) might:

1. advise seller of the right to give a $500 credit in lieu of compliance with the Act, and if seller consents, give the credit at closing of title, or
2. ask the seller to complete the disclosure statement or consider adding a rider to the proposed contract of sale which contains the disclosure statement.

The seller's attorney should also require the purchaser to either acknowledge receipt of the disclosure statement attached to the contract of sale or the $500 credit in lieu of the statement.

If the attorney represents the purchaser, he (she) might:

1. ask for the disclosure statement or a rider in the contract which contains the statement, or
2. advise the client of the $500 credit, and if acceptable to the client, require the credit to be given at closing.

The Purchaser's lawyer should also consider having the seller make representations in the contract of sale that the disclosure statement is true and complete and shall survive closing of title (for one year, perhaps), that there is a duty to provide a revised disclosure statement if seller acquires knowledge which renders the original statement materially inaccurate or that seller has declined to provide the statement and will give the purchaser a $500 credit in lieu thereof.

Back to Top