Until the late 1990’s, an individual purchasing a home had to be guided by the principle of “buyer beware”. This was because Pennsylvania law did not previously require the seller of real estate to disclose information regarding the condition of the home he was selling.
Therefore, if an individual wanted to be certain that the home he was buying was in good condition, he had to rely on his own judgment, or hire his own professionals to inspect the property.
However, the seller of real estate must now comply with the Real Estate Seller Disclosure Law. Under this law, most sellers of residential real estate must provide a written disclosure statement to the prospective buyer of their home detailing its physical condition.
Importantly, this disclosure statement must be provided to the prospective buyer before the agreement of sale is signed which commits the buyer to the purchase of the property.
Fortunately, this disclosure statement is quite extensive. It requires the seller to provide information regarding the condition of most, if not all, of the physical systems and components of the property.
As such, if the seller is aware of any problem regarding the condition of the property, the disclosure statement will almost certainly reveal the problem if the disclosure statement is answered honestly.
While the information required by the disclosure statement is too extensive to detail in this space, examples of the information which must be disclosed include the age and condition of the roof, the soundness of the walls and foundations, and detailed information regarding the condition of the sewer, plumbing, electrical, heating, and air conditioning systems.
Other noteworthy items which must be disclosed include the existence of drainage or water problems, and information regarding boundary line disputes, or any legal action affecting the property.
While the disclosure statement attempts to specifically address all physical conditions which could affect the value of the property, it also questions whether there are any other conditions, of any kind, which could materially affect the value of the property. This demonstrates the thorough nature of the disclosure statement.
If the seller is aware of a problem which he does not disclose, the seller is fully responsible for any financial losses which the buyer incurs as a result of the seller’s failure to disclose the condition. This potentially includes the cost of repairing the undisclosed condition.
While this law applies to most transfers of residential real estate, it does not apply to transactions involving commercial real estate. It also does not apply to transfers of residential real estate if the transfer is of a rental structure containing more than four residential units.
Lastly, the deadline for a buyer to pursue a claim against a seller, for a condition which has not been disclosed, is two years from the date of the final settlement.