Property Condition Disclosure Statements: Holding Sellers Liable
In March 2024, there was a major change to NY’s Property Condition Disclosure Act: it gave residential real estate buyer protections and imposed more accountability on sellers. Here's a breakdown of the key updates:
Elimination of the $500 Credit Opt-Out: Previously, sellers could avoid providing a Property Condition Disclosure Statement by offering a $500 credit to the buyer at closing. This option is no longer available. Sellers must now complete and provide the PCDS.
Focus on Flood Risk: The revised PCDA includes seven new questions regarding flood risk. Sellers must disclose information about past flooding incidents, flood plain designation, and flood insurance.
Increased Seller Liability: The most significant change is the potential for lawsuits. If a seller willfully fails to disclose known issues, they can be held liable for the cost of repairs or replacements needed to address those problems. There's more emphasis on seller honesty and avoiding deliberate omissions.
The point about seller liability is important. Before March 2024, sellers had no liability for anything a buyer might have discovered about the property after closing. (It was called the merger doctrine: all of the seller’s obligations merged into the deed once signed.)
Now, so long as a seller provides a buyer with a signed and dated Property Condition Disclosure Statement and a buyer did not waive their rights per the Property Condition Disclosure Act within the contract of sale, buyers can hold sellers liable after closing if they discover defects which they can prove the seller knew of but failed to disclose.
If you think you have a valid claim against a seller under the new Property Condition Disclosure Statement law, call or email our office with the following information so we can discuss your case:
Did you sign the contract of sale after March 20, 2024?
Did the seller provide you with a signed and dated Property Condition Disclosure Statement?
Did the seller provide “No” or “Unknown” answers to questions on the Property Condition Disclosure Statement relevant to the defect or condition in question?
Do you have credible evidence that the seller had actual knowledge of the defect or condition in question?
Did you have to spend money on repairing or replacing the defect or condition which the seller failed to disclose?