Common myths about seller disclosure

In my travels from corner to corner of our Commonwealth, I am learning that market practice varies greatly by region. But one common element is the wide misunderstanding of the Seller Disclosure Law and when to use the Seller’s Property Disclosure Statement. If you are confused, know that you’re not alone. Here are some of the most common mistakes agents are making.

1. The Seller doesn’t live there.

First and foremost, this is not an exception to the law. There are several exceptions that relieve sellers of the obligation to make property disclosures, but this is not one of them. Even if the seller doesn’t currently live on the property, they likely have some knowledge of the condition – even if it’s just tenant complaints or receipts for repairs. The only exception for an unoccupied home is new construction that was never previously occupied. And even in that case, the buyer must receive a warranty on the construction and a certificate of occupancy or code compliance, and the home must be inspected under the building code.

2. The law doesn’t apply to “commercial” sales.

The Seller Disclosure Law applies to “residential real estate transfer[s]” which can be a “sale, exchange, installment sales contract, lease with an option to purchase, grant or transfer…” of between one and four dwelling units. A two-unit duplex sold by Landlord #1 to Landlord #2 still falls under the Seller Disclosure Law, even if the parties consider it to be a “commercial” transaction.

3. The owner died.

Be careful here. Disclosure is generally not required for transfers “by a fiduciary in the court of the administration of a decedent’s estate, guardianship, conservatorship or trust.” However, if the administrator has actual knowledge of a material defect on the property, then they have a common law duty to disclose it to prospective buyers.

4. If there is no disclosure, then the seller won’t be liable.

The seller’s liability is only limited when there is no knowledge of a material defect, a belief that the defect had been corrected, or a reliance on information from a trusted source (e.g., a home inspector). Failure to make the disclosures may actually invite liability, not only for the seller but also for the seller’s agent. Liability attaches to “any person who willfully or negligently violates or fails to perform” any duty under the Seller Disclosure Law. This includes obligations on seller agents to “advise a seller of the seller’s responsibilities” under the Disclosure Law and to provide the seller with a copy of the Seller’s Property Disclosure Statement (Form SPD).

The full text of the Real Estate Seller Disclosure Law can be found on PAR’s website under Laws & Regulations.