Back in May, we wrote about the changes to the Property Condition Disclosure Act that went into effect in March that you can read about here.
To date, the majority of the sellers with whom we’ve worked completed and signed the new Property Condition Disclosure Statement (“PCDS”) while several sellers have asked our office to create revocable trusts so they could transfer their homes into trust. Per Real Property Law § 463(7), a seller, when conveying property from a trust, is exempt from the PCDS requirements.
Recently, when representing the buyer of a single family residential property here in Westchester, the seller provided a completed PCDS but then demanded, per additional provisions in the contract of sale, that the buyer waive any rights they may have in relation to the PCDS and the Property Condition Disclosure Act overall.
In that instance, the buyer agreed because they conducted thorough inspections of the home and, being satisfied with the physical condition of the property, agreed to waive their rights per the PCDS.
The point is that, because the Property Condition Disclosure Act is a civil statute, parties are free to contract around the rights and obligations it imposes upon the respective parties to the transaction. In the above instance, I believe it would have made more sense to simply provide prospective buyers with a letter from the seller or the seller’s attorney stating the buyer would not be providing a signed and dated PCDS and that the contract of sale would reflect as much. Providing the PCDS and then demanding the buyer waive its rights to hold the seller liable per the PCDS seemed like something of a bait and switch but, until both parties sign the contract of sale, all bets are off from a strictly legal perspective.
In addition, there is nothing to prevent sellers informing prospective buyers that they will provide a credit to be applied at closing in lieu of providing a PCDS.
The effectiveness of such tactics will depend, in part, on whether it’s a seller’s market or buyer’s market. As of the timing of this article, it’s more of a seller’s market, so sellers have more leverage with regard to matters such as the PCDS although, if/when the market changes, it’s easy to foresee buyers demanding completed PCDS forms and refusing to waive their rights to hold sellers liable after closing if they feel they can show a seller had actual knowledge of a material defect and neglected to disclose as much.
All in all, we encourage both sellers and buyers to have these conversations with their realtors and attorneys. Call or email The Donaldson Law Firm, PLLC and let us help you navigate the selling and buying process.