New Law Affects Seller Obligations in Residential Property Transactions
A recent change in New York’s Property Condition Disclosure Act (PCDA) is having a direct impact on most residential real property transactions.
Effective as of March 20, 2024, a seller of residential real property now needs to complete, sign, and provide to a buyer a property condition disclosure statement. A property condition disclosure statement is a document signed by the seller providing information about the condition of the property based on the seller's actual knowledge. While it does not provide a warranty, a knowingly false or incomplete statement by the seller on this form could subject the seller to claims prior to and after the transfer of title.
To avoid such issues, previously, most sellers of residential real property, particularly in the downstate areas of New York State, would not provide a buyer with a statement under the PCDA. Rather, sellers would opt to instead provide the buyer with a $500.00 credit in lieu of providing any statement. Under the new PCDA, the seller’s option to provide this credit has been eliminated; the statement must be provided prior to the buyer(s) signing of the contract.
The PCDA affects sales of 1-4 family residential properties. The statutory exemptions remain unchanged; estates, fiduciaries, condominiums, and co-operative units do not have to provide a property condition disclosure statement.
Additionally, the revisions to the PCDA also expanded the total number of questions to 56, with 7 new detailed questions relating to potential flood zone and flood insurance issues added to the statement. (Click here to access the new PCDS Form.)
It is important for sellers, buyers, and real estate agents to be aware of and understand these changes.
This is not intended to be legal advice. For specific questions or to inquire about your potential rights and obligations under the PCDA, we invite you to contact our office.
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Aaron C. Fitch is a Partner at the firm with a focus on residential and commercial real estate and business and transactional law. He can be reached at afitch@drakeloeb.com and 845-458-7318.
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