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Client Alert - New York Adopts Disclosure Form for Sale of Private Houses


Joining a nationwide trend, the New York State legislature recently passed a law requiring anyone who sells residential real estate in New York to deliver a property condition disclosure form to the buyer before the buyer signs the contract. This requirement goes into effect for all contracts of sale signed on or after March 1, 2002, and applies to all property improved by a one- to four-family dwelling. It does not apply to coops and condominiums or to unimproved property. It also will not apply to certain transactions, such as transfers under a divorce decree, foreclosures and sales by estates, nor to transfers between co-owners or between spouses. The form must be attached to the contract of sale before signing. If the seller fails to supply the disclosure form, the buyer is entitled to a $500 reduction in the price.

The Act provides that the disclosure form is not intended to be a warranty by the seller, and disclosures are based solely on the seller's actual knowledge. The seller is not required to undertake any investigation or inspection to complete the form. The Act does not change the parties' right to negotiate the condition of the property at closing (e.g., that the systems will be in working order, that the property is sold 'as is,' etc.). And it is not a substitute for inspections by the buyer who is encouraged to obtain an independent professional inspection and environmental tests and to review public records concerning the property. The seller may be liable for actual damages, however, for making a knowingly false or incomplete statement.


Background Information

The form first asks for background information including how long the seller has owned and/or occupied the property and the age of the structure. It also asks if there are any other people claiming an ownership interest in the property, if there are any easements and any features of the property shared in common with adjoining landowners.


The form requires disclosure of environmental conditions and hazards. It asks if the property is located in a floodplain, designated wetland or agricultural district. It requires disclosure if the property had been the site of a landfill, if fuel tanks were ever stored on it, if the presence of asbestos or lead plumbing had been found, and if radon tests had ever been performed. Finally, it requires disclosure of any spills or leaks of petroleum products, methane gas or any hazardous or toxic substances.


The form asks if there has been any rot or water damage, fire or smoke damage, or termite or other insect or rodent infestation. It asks what type of material the roof is made from and if there are any defects in the roof. Finally, it asks for disclosure of any defects in the structural elements of the building.

Mechanical Systems and Services

The form asks for the source of water supply and whether the water quality has been tested, the type of sewage system and electric service and known defects in either. It asks whether there have been any problems from flooding, drainage or standing water. It then requires disclosure of known material defects in any of the following: plumbing system, security system, carbon monoxide detector, smoke detector, fire sprinkler system, sump pump, foundation, interior walls and ceilings, exterior walls or siding, floors, chimney, fireplace or stove, patio or deck, driveway, air conditioner, heating system or hot water heater.


It remains to be seen what effect the new disclosure requirements will have on sales of residential real property in New York. For now, it is important to understand your rights and responsibilities when you are buying or selling a house. If you need any assistance, please contact one of our personal services attorneys.

Lewis R. Cowan (212) 790-9230
Simon Gerson (212) 790-9206
Robert J. Giordanella (212) 790-9234
Robert Halper (212) 790-9260
Peter R. Porcino (212) 790-9208

Copyright 2002 Cowan, Liebowitz & Latman, P.C.


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