What is a Seller property disclosure?
A Seller Property Disclosure is a requirement in a standard residential sales contract. Only the seller may complete and sign this form. The agent or property management company is not authorized to sign on their behalf. It requires a seller of residential property to disclose all known & latent defects (they have actual knowledge of) in the property. Latent defects are material defects that a purchaser would not reasonably be expected to ascertain or observe by a careful, visual inspection of the property. The seller is also required to disclose any defects that could impose a threat to the health or safety of the purchaser or occupant of the property. This would include tenants or invitees of the purchaser. The disclosure should be delivered to the purchaser at the time the sales contract is signed. In the Washington, DC Metro area there are jurisdictional variations to the disclosure, as well as the remedies for the purchaser in the event the seller does not provide it in a timely manner.
The District of Columbia disclosure.
In DC, the disclosure should be delivered with the sale contract of any property that consists of one to four residential units. The seller must answer all questions on the disclosure form. If there are questions that do not apply to the property, then an “N/A” must be inserted. All questions must be answered in good faith, so if a fact is not known to the seller then “Unknown” must be entered. In the sale of a condominium or cooperative these questions pertain to the seller’s unit only, not common areas or elements. If the disclosure is delivered after the sales contract is signed, the purchaser may terminate the contract by written notice no more than five (5) days after the receipt of the disclosure. If not delivered by the seller within this time frame, the purchaser’s deposit must be returned. This right to terminate is deemed waived by the purchaser if they make a mortgage application, the settlement takes place or they occupy the premises before they execute the notice of termination.
The Virginia disclosure.
In Virginia, the seller is required to use the Virginia Real Estate Board developed form. If the Seller is signing a disclosure statement, they must disclose all known defects they have actual knowledge of or “any other material defects affecting the physical condition of the property”. It must be delivered to the purchaser prior to the ratification of the contract. If not, then the purchaser has three (3) days after receipt to cancel the contract. This right to cancel is lost if the purchaser occupies the property, applies for a mortgage or settles.
In the event a property is sold “as is” the seller must deliver a disclaimer statement. No inspections are required. The seller cannot conceal any known latent defect that an inspection of the property would not reasonably reveal. The seller is not liable for any errors or omissions they have no actual knowledge of. At settlement, the statement must be updated to include any changes (if applicable) or certify the property is in the same condition as when the disclosure was signed. The purchaser may waive their right to a disclosure statement. Virginia gives the purchaser the right to sue the seller for actual damages based on seller misrepresentation up to one year after settlement.
The Maryland disclosure.
Here, the seller must deliver a Residential Property Disclaimer Statement, stating the property is being sold “as is”, therefore making no representations as to the condition of the property, or a Residential Property Disclosure Statement, disclosing all known defects in the property. In Maryland, the purchaser cannot waive their right to receive the disclosure.
The disclosure must be dated & signed by the purchaser acknowledging receipt. It should be delivered prior to or at the time of the contract. If the purchaser receives the disclosure on or before entering into the contract, they have no right to rescind the contract based on the information contained in the disclosure. However, if the delivery date is not met, they have an unconditional right to rescind the contract upon receipt of the disclosure or within 5 days after receipt. They also have the right to the return of their earnest money deposit. This right is lost if the purchaser makes a mortgage application, occupies the property or settles.
A Seller Property Disclosure is a very important part of a contract to purchase real property. The purchaser should thoroughly review the disclosure with their agent & contract their attorney with any questions. The experienced attorneys at Mehalko & Moghul can help you understand your rights and navigate this important step in the sale process.