Seller Beware

You are ready to put you home on the market. You may hire a real estate agent to help you sell, or you may decide to sell it on your own. Either way, you will need to complete a Seller Disclosure and give it to the buyer before the Agreement of Sale is signed.  A seller needs to take this document seriously because failure to do so can get a seller into big trouble.  

Pennsylvania has a Real Estate Seller Disclosure Law that sets out what a seller must disclose for the sale of residential real property [68 Pa.C.S. §7301 et seq.]. Specifically, a seller must disclose all known material defects about the property being sold that are not readily observable. A “material defect” is “a problem with the property or any portion of it that would have a significant adverse impact on the value of the residential real property or that involves an unreasonable risk to people on the land.”

For example, if you know that your basement leaks, you must disclose that defect. If you do not disclose the defect, you could end up paying the buyer to repair the defect and for any damage that occurred. To make matters worse, Pennsylvania courts have determined that a violation of the Real Estate Seller Disclosure Law can be considered a violation of the Unfair Trade Practices and Consumer Protection Law, which allows a buyer to recover attorney’s fees and possibly triple damages. Keep in mind that the required disclosure of known material defects includes not just your home, but also the land. So, if you have a large tree that you know is rotten and in danger of falling, you need to disclose this defect even if it is not covered in the Seller Disclosure. Otherwise, you could be liable for the cost to remove the tree or for any damage caused by the tree falling down.

In addition, selling your house “as is” will not exempt you from disclosing material defects under the Real Estate Seller Disclosure Law.  Phelps v. Caperoon, 190 A.3d 1230 (Pa. Super. Ct. 2018).  Keep in mind that the duty to disclose a material defect continues up until the date of settlement. So, if a material defect happens between the signing of the Agreement of Sale and settlement, a seller must disclose that defect.

So, what should a seller do?

• Err on the side of disclosure. A good guideline is to ask yourself if you would want to know about a particular past or current problem.  If you would, then include the problem and resolution in the Seller Disclosure.

• Keep records of major repairs or renovations.

In conclusion, it is important to always be on the safe side when it comes to the duty to disclose when selling your real property. It is best to be transparent and disclose any known past or present problem at any point prior to signing the Agreement of Sale.  This is the best way to protect yourself from future litigation.