“New” New York Requirement for Sellers of Real Property: the Shift from “Buyer Beware” to “Seller Beware”!
The Property Condition Disclosure Statement (“PCDS”) is a document that sellers must complete to the best of their actual knowledge before closing on the sale of their property. It requires sellers to disclose the condition of their property, including knowledge about material defects, to buyers prior to closing. Any seller who fails to honestly complete this form can be exposed to liability, even after the closing of the sale.
Prior to the passing of the Property Condition Disclosure Act (“PCDA”), a law signed by Governor Hochel in 2023 and effective March 2024, New York sellers could give the buyer a $500 credit at closing in lieu of providing the PCDS. That changed with the passage of the PCDA: now all sellers of real property (with some exceptions, including sellers of condominium units) provide buyers with the PCDS. And intentional omissions or false statements on the PCDS “may subject the seller to claims by the buyer prior to or after the transfer of title.” That means buyers can sue sellers after closing.
So what information does a seller have to disclose in the PCDS? The seller must answer a lot questions that identify whether the seller is aware of the presence of any of the following:
Fuel storage tanks
Asbestos
Lead plumbing
Rot or water damage
Fire or smoke damage
Termites, insects, rodent infestation
Known material defects in the footings, beams, girders, etc.
Flooding, drainage, or grading problems
The PCDS also requires sellers to answer whether they have knowledge of any known material defects to the following systems: plumbing, security, sump pumps, foundation/slab, interior walls/ceilings, exterior walls, siding, floors, chimney/fireplace/stove, patio/deck, driveway, air conditioning, heating system, and hot water heater.
The PCDS does not take the place of a buyer’s home inspection, and the PCDA law does not require sellers to “become engineers”. Rather, PCDA requires sellers to answer questions based on the seller’s actual knowledge - and provides buyers with possible recourse against sellers who knowingly lie about material defects or issues with the property.
And, there are several exemptions in the PCDA, one of which includes, “transfer[s] by a fiduciary in the course of the administration of . . . a trust[.]” You also do not need to provide a PCDS to a buyer if you are a fiduciary of an estate, transferring the property to your spouse while married or in connection with a divorce settlement, or transferring the property to certain of your children.
So what does this all mean for you if you want to sell your home? You have to honestly complete the PCDS to protect yourself from potential liability. You could also transfer your home to a trust (a valuable estate planning tool that is discussed in several other articles on Seward & Seward’s website) as a trustee is not required to complete a PCDS – and a trust might be a good option for certain owners anyway.
Do you have questions about your real estate transaction or estate planning? Call Seward & Seward today – we are happy to schedule an appointment to help you navigate your legal hurdles and plan for your future.
Seward & Seward
516-766-1415
Catie@SewardsLaw.com