February 20, 2024 • 22 mins
Welcome to another episode of Hudson Valley Real Estate Explained! Join host Michael Kahns, co-host Rik Brescia, and esteemed real estate attorney Ian Lindars for an enriching conversation about New York State's looming legal changes set to reshape real estate transactions. Ian unravels the legal details of the critical changes, especially the abolition of the $500 credit for sellers who failed to complete the property condition disclosure statement. This episode delves into the increased seller liability, the enlarged scope of buyer's due diligence, and multiple other aspects of this legal turn.
Embarking on an incisive journey, we delve into the detailed characteristics of Property Condition Disclosure Statements, the candid consequences of fraud or misrepresentation, the necessity of legal counsel, and the significance of honesty in these pivotal forums. Ian also dissects the implications of the freshly amended New York State law, effective March 20, 2024, particularly the potential of introducing real damage liability for sellers who avoid filling out the statement.
This episode puts a spotlight on the repercussions of not fully completing the form and brings to the fore numerous case scenarios underscoring the importance of full disclosure and professional consultations. Offering a comprehensive comprehension of the real estate landscape, this conversation serves as a vital guide for anyone stepping into the realms of new or used home buying.
To wrap up, our guests recount their personal experiences, illustrate past cases that have influenced their understanding of the sphere, and share their direct contact details. Offering intriguing narratives, valuable advice, and comprehensive professional insights, this episode is essential for anyone involved in real estate transactions. Keep abreast of the latest legal updates regarding Property Condition Disclosure Statements by tuning in to this informative episode.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:05):
Welcome to Hudson Valley's Real Estate Explained, your getaway to understanding real estate.
Whether you're buying your first home, an experienced investor,
or just real estate curious, this is the place for you.
So dive in with us as we unravel the intricacies of property deals and investment
strategies guided by industry experts.
We're demystifying Hudson Hudson Valley Real Estate together. Let's go.
(00:28):
And welcome back to another episode of Hudson Valley Real Estate Explained.
I'm your host, Michael Kahnz, and I'm joined today with, again, Mr.
Rick Brescia and a special guest coming to us, a real estate attorney here in the area.
His name is Ian Lindars, and I'm going to let him talk a little bit about where
he's from and all of his experience.
(00:48):
But we've got a really great episode for everybody today.
There is a big change coming to New York State, a big law change that's going
to impact every real estate transaction without question across the entire state,
and we're going to dive right into that shortly.
But first, Ian, welcome to the show. Thank you very much for having me.
Thanks for coming. You gave a presentation not too long ago to the team.
(01:12):
You brought a wealth of knowledge about this change, and I think we're really
prepared, and we're really looking forward to diving into it today.
But for now, why don't you tell our audience a little bit about who you are,
what your experience is, and why you're qualified to talk about this topic.
Sure. Excellent. So again, my name is Ian Lindars.
(01:32):
I'm a partner with Stanger, Glass, Hagstrom, Lindars, and Ueli.
We recently rebranded the firm, and we're really excited about the practice
and going forward in the future.
Me personally, my career started out doing a lot of litigation and actually
had some cases involved with property condition disclosure statements.
(01:53):
But since then, I've developed a real estate practice. I manage the municipal
law department at the firm, but I also am heavily involved with real estate
and grew up with real estate. My mom was a real estate agent.
And so it's kind of in my blood.
Excellent. Excellent. So super happy to have you on the show again today.
You know and you alluded to it the topic today is property condition disclosure
(02:16):
there's a change right the property condition disclosure has existed for a long time however.
For a long, for, since it was put out there by New York state sellers has,
have had an opportunity to waive the responsibility of filling out this form
in lieu of a $500 credit to buyers.
(02:38):
Can you tell us a little bit about the change that's coming and what's happening with it today?
Sure. And also when it's coming. Yes. That would be helpful.
Yeah. So it's, it's a first it's effective March 20th, 2024. It'll be in effect.
The change in the law was to the provision which allowed for a remedy.
(03:05):
It was described as a remedy, and the remedy was for not filling out the property
condition disclosure statement. And that remedy would be a $500 credit that has been removed.
So now there is, it's been replaced with liability now.
And the term liability is in inputted in the same place where remedy was.
(03:25):
So now what they're doing, it seems to be causing a cause of action or creating
a cause of action or potential cause of action for somebody who, who does not provide it.
Got it okay so as a as a fifth grader what does that mean.
So i'm sorry guys you're a very tall fifth grader,
(03:51):
just rubbing it in on me. So what it does is it creates liability for failing
to provide one. It can create a cause of action.
So if you don't provide it, then you could be liable for actual damages is the
(04:14):
phrase that's used in the new law.
So any damages that would have been incurred by the buyer as a result of not
receiving it, they would have a cause of action for.
And there could be a number of different types of causes of action,
which we can get into, but it might be a little deeper than you want to go today.
(04:35):
Yeah, sure. So essentially, they don't have the option to do it anymore.
Otherwise, they're at risk of going to court and being sued.
Correct. It's absolutely going to create a greater potential for litigation.
Got it. And Ian, as far as that start date goes of March 20th, you said? Yes. Okay.
What about homes that are actually already on the market? Is it retroactive
(04:58):
where they have to go back and fill out a property condition disclosure now?
So what the law is requiring is that the property condition disclosure statement
be completed by the seller to the seller's actual knowledge.
There's still no duty for them to investigate or do any further research into
(05:18):
any particular disclosure.
But it does require them to fill out the disclosure form and deliver it to the
buyer before the buyer signs a contract.
So the property is currently listed. It's not really based on the listing.
It's based on the buyer signing a contract.
So when the buyer signs the contract, they should receive with that a fully
(05:43):
completed property condition disclosure statement and signed by the seller.
Okay. Got it. Thank you. That makes sense.
So for those out there shopping that haven't seen a property condition disclosure, give us a summary.
What is it? What are they going to have? What should the buyer be expecting
to receive and what should the seller be expected to fill out? Summary.
(06:03):
So the way I have always described it to my clients is it's like,
I think it's a six, seven page total form.
It has, I believe the old form had 48.
The new has, I think, 54 questions on it, which have, have, there's a question
(06:23):
that has, and there'll be little boxes you can check.
Yes, no, unknown, or not applicable.
So there's four responses to every one of those questions. Mm-hmm. And they are...
With regards to the property. Yeah. Roof. Condition of the house.
Condition of the house, yeah. Yeah. Structural, everything.
They did, there was an additional change.
(06:43):
Yeah. So the new change has two major changes to it.
First is the property condition disclosure statement, $500 credit, that's gone.
Yeah. The second is they added a number of questions with regards to floodplain, flood zones.
So flood issues. There was a number of questions added there.
(07:05):
Yeah, well, with all the rain we're having, you can maybe understand why.
Yeah, and I honestly think that was more of the drive behind this law than removing the credit.
I think there was a concern about all of the water issues that are happening.
And so this was in an effort to help address that.
(07:26):
Makes sense. I guess, Ian, my question would be, is this also applicable to
condos and co-ops as well?
So there was no amendment to how the law applies.
So it still is one to four family homes and townhomes.
That's what it still applies to. All the other exemptions, everything is staying
(07:47):
the same. Gotcha. And it doesn't touch commercial?
No. Okay. So again, for our audience that may not be familiar with them,
what are a couple of those exemptions?
Oh, condos are an exemption, vacant land.
Estate sales? Estate sales. Foreclosures? Foreclosures, correct.
Got it. So if it's a- Co-ops.
(08:08):
So if it's something that they can claim they have no knowledge of based on
the fact that they inherited the house or the bank foreclosed on the house,
they obviously are going to have a hard time filling this out because they don't
have any experience with the house.
So they get an exemption from having to fill it out.
In those instances. But again, I want to be careful. I don't want to,
(08:29):
I don't want to, we're discussing exemptions.
The requirement to fill it out is still based on actual knowledge.
So that statement could apply to even somebody who knew, who bought a house
and didn't, if you don't have actual knowledge on the issue,
it's, you can, you can honestly say that you don't know something.
(08:49):
Got it. Right. So I don't want to, I don't want to mix up what the law says
about having to actually actually fill this out with what some of these exemptions are.
I just want that to be clear. That makes sense. No, that's, that's,
that's really important.
So, so a multi-page document walking through the condition of the house,
you'll have the boxes you can check.
Yes, no, don't know, you know, who this, this obviously is in favor of the buyer,
(09:16):
you would assume, right?
This is going to help buyers get a better picture of the house that they're buying. Absolutely.
It's going to give them more information before purchasing the home.
Now, it doesn't provide any warranties. It doesn't replace their obligation
to do any inspections on the home.
(09:37):
All of that should continue. None of that changes.
In fact, when you receive a property condition disclosure statement,
now there could be things marked in there which would give the buyer knowledge
privilege before signing a contract,
which they may want to investigate further and most likely should investigate
further because now they're on notice of whatever that issue may or may not have been.
(10:02):
So it, it, it, I think it increases the, the, the responsibility of the buyer
to do their due diligence. Love it. Absolutely.
Love it. So, so they're going to be a little bit made more,
where what if, what if something's discovered after the fact that they buy the
house, it wasn't disclosed, they go up into the attic,
(10:25):
you know, maybe they didn't do their due diligence and get a home inspection,
or maybe they did in the home inspector missed it, but let's say they find something
that should have been disclosed on that report after the fact,
do they have any recourse?
So there's two timeframes we should be looking at here. Okay.
The law change says we have to fill out the property condition disclosure statement
(10:47):
seller and provide that to buyer before he signs the contract.
Now, from the date you sign the contract to the date you close,
if the seller finds out something in that timeframe, they're obligated under
the law to provide an updated disclosure.
Got it. Okay. So they come into knowledge of something during that timeframe,
(11:09):
they would have to disclose close that and provide an updated property condition
disclosure to the buyer.
Once you close, okay, after that, unless there was some active concealment, fraud.
Some misrepresentation that occurred, then you bought the house.
(11:34):
So at that point, everything due to the merger doctrine, everything would merge
into the deed and then they own the property.
But if there's misrepresentation or if there's a fraud, that would create a
cause of action, which then you could decide, you could consult an attorney,
and then you determine whether or not it makes sense to bring a lawsuit or not. To litigate.
(11:56):
Okay. Litigation, yep. Gotcha.
Very cool. So there could be some, you know, this can be used against a seller
potentially, depending on the circumstances.
I'm not saying that it, you know, most of the time, well, but sellers should
think when they fill this out and make sure that they're filling it out accurately.
Absolutely. Absolutely. In our office, we've been discussing that and what that
(12:19):
means and, and how early in the process that we might be now brought in.
We might be brought in very early in the process now to discuss these statements.
Actually, I was going to ask you that. Is this something they should be filling
out now with their attorney or something they fill out and knowing that their
attorney will see it and review it at some point?
(12:42):
I think every situation might be a little bit unique on that,
but I do think that before they release it, they can fill it out themselves.
If they have questions, they should consult their, their counsel on it.
If they are confident about their answers and because again,
it's based on their actual knowledge.
The best of their knowledge. Yeah. So, uh, their actual knowledge.
(13:04):
So, so if they fill it out and they're, they don't have any questions, then fine. fine.
But if they want to discuss it with the attorney, find out what it means,
it might behoove them to do so. So they understand their liabilities.
I would recommend it. I would, I would absolutely recommend it. Okay.
Yeah. It seems like that's something I would recommend, you know,
to a seller myself would be, you know, you might want to consult your attorney.
(13:28):
If there's anything even remotely iffy on this that you're filling out that
you're not sure of how you should fill it out. Correct.
And we're anticipating that there's going to be a lot more involvement with
that because it's kind of scary to fill that form out. There's so many questions on it.
And, and people may not know exactly how they should answer it.
And again, you can be sued for anything, right?
(13:49):
So even, even though you answered it to the best of your knowledge,
if it's discovered after the fact, they may believe that you knew,
and then they would bring a lawsuit and they would have to prove that,
that the seller had actual knowledge and then misrepresented that on the form. Right.
Which, which could be tough to prove, but with a shark arc of an attorney sometimes.
(14:11):
It is difficult to prove, but again, every situation would be different.
And I think that at least in our firm, that's one, I think, advantage of our
firm is that we can do both.
We litigate and we do real estate.
So we have the ability to analyze that from both sides of the fence before and after.
(14:31):
Yeah, that's great. I can see how that'd be super helpful in us with this coming up for sure.
Absolutely. As representing the buyer and their contract, would that be part
of your contract review is to also
take a look at the property condition disclosure and give them advice?
Absolutely. Because it's both sides of the coin now.
So when we receive one, we're going to want to look at that probably more so
(14:54):
on the buyer because we want to look at it and make sure that there aren't any
questions that we could be advising our clients saying, hey,
you may want to double check this. You may want to follow up with this.
You may want to have a consultant go out and look at this.
If there's anything that's not filled out on it and empty, the current case
law that I've seen in these situations.
(15:14):
So seller provides property condition disclosure statement.
That statement leaves certain questions blank.
Buyer signs, proceeds with the deal, closes, later finds out those blank questions,
there were issues there, and they've tried to bring lawsuits saying,
hey, they misrepresented the facts here.
(15:37):
And the courts have said they've denied those cases.
They've dismissed those clauses of action because the basis of the dismissal
was the fact that the buyer would have to prove not only that they misrepresented something,
but they also have to prove that they detrimentally relied on it.
(15:57):
And so if it was blank and they accepted it, the court said there's no detrimental
reliance on that at that point. So if you see something missing,
it's still caveat emptor, buyer beware, you still need to follow up and do your due diligence.
That's good to know. So if you see some blank spaces on that property condition
(16:18):
disclosure, your instinct is to pick up, call the other attorney and say,
hey, this isn't filled out in full.
You need to get this done for us. Absolutely.
It actually raises more questions than it.
Yeah. Yeah. It's like a giant red flag. I thought of a scenario years ago where
this actually came into play. Oh yeah?
A little bit. Yeah. Well, not a little bit, a lot actually, where I think I
represented, yeah, I did the buyer on the house and the buyer moved into the house.
(16:42):
There was, you know, property condition disclosure back then was waived. Yeah.
$500 credit was given at closing. And if I recall correctly,
a contractor came to the door out of a courtesy call to check on prior work done.
And it had something to do with flooding in the basement and the buyer,
(17:04):
and I'm assuming inspector at the time missed that at some point,
this basement had actually flooded.
So now here's a contractor just coming back, trying to either,
you know, establish more work or, or just be great at his job and, and check.
And it was a new bot. It was a new owner in there.
It was like, what do you mean flooding in the basement? You know?
So yeah, I could see how this would, you know, come in handy and I can also
(17:27):
see how it could could generate issues down the line with, with things like that.
Correct. Well, and sellers are going to really have to, you know,
admit when things are, things have gone wrong, because that's a perfect case where if they.
Checked no prior flooding, they have a very strong case because they clearly
(17:47):
had worked on due to flooding that the seller had had no had knowledge of flooding in the basement.
And I think that would be, you know, potentially a lawsuit that could be brought
in that situation again how those questions are phrased
and how you answer them all of that would come that would
be analyzed in the courts yeah a typical
(18:08):
or not shouldn't say typical but a way that has come up
that i've seen is that there were remedies that were done a year earlier so
they fixed the issue a year earlier and the question that was asked wasn't specific
about flooding it was about current or something like that right and they were
analyzing how the question was phrased. Yeah. And so.
(18:29):
They couldn't prove they had actual knowledge from the correction forward of
any flooding. So the owner filled it out saying, I don't have any water.
Because the question is, did you have any water in the basement or something?
The answer was no. So now they're challenging that.
So that's kind of hard to say because since he's fixed it, he's fixed the issue.
So he answered it to his actual knowledge and to the best of his ability.
(18:51):
Right. So how far back do you have to go back to explain these things now to
avoid an issue? I think what I'm picking up here is consult your attorney.
And if everybody could just be a little honest. And really, that's the drive behind this.
The drive is let's have some honest disclosure about what these houses are.
(19:14):
And buyers need to understand too, when you're buying a home,
it's not new construction.
If you're buying a used home, it's a used home. It's going to have problems.
You can't expect that everything's going to be perfect. There's going to be issues.
That's a good question. Does new construction require a property condition disclosure?
No. Good to know.
(19:37):
Well, Rick, do you have any other final questions? Oh, you would think I would,
Mike, as you told me to have final questions nearby.
But if you could vamp for a moment.
If it's helpful, you want me to do a little recap just so people know? Sure.
So again, the property condition disclosure statement has been updated and amended
(20:01):
by New York State effective March 20, 2024.
It removes the seller's ability to provide a $500 credit.
For not filling it out and actually creates potential liability for actual damages
if you fail to fill one out.
So the obligation now is seller, you have to fill out property condition disclosure.
(20:24):
You have to provide it to the buyer before buyer signed the contract.
And that's the property condition disclosure side of it.
That form will have additional questions with regards to flood issues,
which will also have to be answered.
And Mike, as I went down the questions Questions that I'd written down, Mr.
Lindar's answered all of them already for us. All right. Fantastic.
(20:47):
Ian, why don't you tell our audience where they can get in touch with you? Sure.
So our office is on 1136 Route 9 in Wappingers Falls.
Our phone number is 845-298-2000.
And we do have a website. That's stengerglass.com. And all our information's there.
(21:08):
Areas of law we practice. this is all on the website. Yeah, you cover just about everything.
And for the record, I've been using Ian on real estate deals for quite a while now.
Just a tremendous attorney and really appreciate you coming down and sharing this important update.
This is going to impact real estate transactions throughout New York State and
(21:29):
it's important for everybody to know. So I really appreciate you coming down.
Thank you for having me. Thank you very much. And we again appreciate you coming
in the other day and doing that presentation as well. I know we thanked you
privately, but now to thank you publicly just makes us look like better people.
It was fun. It was great talking to people who are going to be dealing with
this law on a daily basis. It's great. We appreciate it, Ian.
(21:49):
Thanks so much. Thank you. All right, guys.
Team Banks, Hudson Valley's Real Estate, X Factor, we're out.
Music.
Welcome to Hudson Valley's Real Estate Explained, your getaway to understanding real estate.
Whether you're buying your first home, an experienced investor,
or just real estate curious, this is the place for you.
So dive in with us as we unravel the intricacies of property deals and investment
strategies guided by industry experts.
We're demystifying Hudson Hudson Valley Real Estate together. Let's go.
(00:28):
And welcome back to another episode of Hudson Valley Real Estate Explained.
I'm your host, Michael Kahnz, and I'm joined today with, again, Mr.
Rick Brescia and a special guest coming to us, a real estate attorney here in the area.
His name is Ian Lindars, and I'm going to let him talk a little bit about where
he's from and all of his experience.
(00:48):
But we've got a really great episode for everybody today.
There is a big change coming to New York State, a big law change that's going
to impact every real estate transaction without question across the entire state,
and we're going to dive right into that shortly.
But first, Ian, welcome to the show. Thank you very much for having me.
Thanks for coming. You gave a presentation not too long ago to the team.
(01:12):
You brought a wealth of knowledge about this change, and I think we're really
prepared, and we're really looking forward to diving into it today.
But for now, why don't you tell our audience a little bit about who you are,
what your experience is, and why you're qualified to talk about this topic.
Sure. Excellent. So again, my name is Ian Lindars.
(01:32):
I'm a partner with Stanger, Glass, Hagstrom, Lindars, and Ueli.
We recently rebranded the firm, and we're really excited about the practice
and going forward in the future.
Me personally, my career started out doing a lot of litigation and actually
had some cases involved with property condition disclosure statements.
(01:53):
But since then, I've developed a real estate practice. I manage the municipal
law department at the firm, but I also am heavily involved with real estate
and grew up with real estate. My mom was a real estate agent.
And so it's kind of in my blood.
Excellent. Excellent. So super happy to have you on the show again today.
You know and you alluded to it the topic today is property condition disclosure
(02:16):
there's a change right the property condition disclosure has existed for a long time however.
For a long, for, since it was put out there by New York state sellers has,
have had an opportunity to waive the responsibility of filling out this form
in lieu of a $500 credit to buyers.
(02:38):
Can you tell us a little bit about the change that's coming and what's happening with it today?
Sure. And also when it's coming. Yes. That would be helpful.
Yeah. So it's, it's a first it's effective March 20th, 2024. It'll be in effect.
The change in the law was to the provision which allowed for a remedy.
(03:05):
It was described as a remedy, and the remedy was for not filling out the property
condition disclosure statement. And that remedy would be a $500 credit that has been removed.
So now there is, it's been replaced with liability now.
And the term liability is in inputted in the same place where remedy was.
(03:25):
So now what they're doing, it seems to be causing a cause of action or creating
a cause of action or potential cause of action for somebody who, who does not provide it.
Got it okay so as a as a fifth grader what does that mean.
So i'm sorry guys you're a very tall fifth grader,
(03:51):
just rubbing it in on me. So what it does is it creates liability for failing
to provide one. It can create a cause of action.
So if you don't provide it, then you could be liable for actual damages is the
(04:14):
phrase that's used in the new law.
So any damages that would have been incurred by the buyer as a result of not
receiving it, they would have a cause of action for.
And there could be a number of different types of causes of action,
which we can get into, but it might be a little deeper than you want to go today.
(04:35):
Yeah, sure. So essentially, they don't have the option to do it anymore.
Otherwise, they're at risk of going to court and being sued.
Correct. It's absolutely going to create a greater potential for litigation.
Got it. And Ian, as far as that start date goes of March 20th, you said? Yes. Okay.
What about homes that are actually already on the market? Is it retroactive
(04:58):
where they have to go back and fill out a property condition disclosure now?
So what the law is requiring is that the property condition disclosure statement
be completed by the seller to the seller's actual knowledge.
There's still no duty for them to investigate or do any further research into
(05:18):
any particular disclosure.
But it does require them to fill out the disclosure form and deliver it to the
buyer before the buyer signs a contract.
So the property is currently listed. It's not really based on the listing.
It's based on the buyer signing a contract.
So when the buyer signs the contract, they should receive with that a fully
(05:43):
completed property condition disclosure statement and signed by the seller.
Okay. Got it. Thank you. That makes sense.
So for those out there shopping that haven't seen a property condition disclosure, give us a summary.
What is it? What are they going to have? What should the buyer be expecting
to receive and what should the seller be expected to fill out? Summary.
(06:03):
So the way I have always described it to my clients is it's like,
I think it's a six, seven page total form.
It has, I believe the old form had 48.
The new has, I think, 54 questions on it, which have, have, there's a question
(06:23):
that has, and there'll be little boxes you can check.
Yes, no, unknown, or not applicable.
So there's four responses to every one of those questions. Mm-hmm. And they are...
With regards to the property. Yeah. Roof. Condition of the house.
Condition of the house, yeah. Yeah. Structural, everything.
They did, there was an additional change.
(06:43):
Yeah. So the new change has two major changes to it.
First is the property condition disclosure statement, $500 credit, that's gone.
Yeah. The second is they added a number of questions with regards to floodplain, flood zones.
So flood issues. There was a number of questions added there.
(07:05):
Yeah, well, with all the rain we're having, you can maybe understand why.
Yeah, and I honestly think that was more of the drive behind this law than removing the credit.
I think there was a concern about all of the water issues that are happening.
And so this was in an effort to help address that.
(07:26):
Makes sense. I guess, Ian, my question would be, is this also applicable to
condos and co-ops as well?
So there was no amendment to how the law applies.
So it still is one to four family homes and townhomes.
That's what it still applies to. All the other exemptions, everything is staying
(07:47):
the same. Gotcha. And it doesn't touch commercial?
No. Okay. So again, for our audience that may not be familiar with them,
what are a couple of those exemptions?
Oh, condos are an exemption, vacant land.
Estate sales? Estate sales. Foreclosures? Foreclosures, correct.
Got it. So if it's a- Co-ops.
(08:08):
So if it's something that they can claim they have no knowledge of based on
the fact that they inherited the house or the bank foreclosed on the house,
they obviously are going to have a hard time filling this out because they don't
have any experience with the house.
So they get an exemption from having to fill it out.
In those instances. But again, I want to be careful. I don't want to,
(08:29):
I don't want to, we're discussing exemptions.
The requirement to fill it out is still based on actual knowledge.
So that statement could apply to even somebody who knew, who bought a house
and didn't, if you don't have actual knowledge on the issue,
it's, you can, you can honestly say that you don't know something.
(08:49):
Got it. Right. So I don't want to, I don't want to mix up what the law says
about having to actually actually fill this out with what some of these exemptions are.
I just want that to be clear. That makes sense. No, that's, that's,
that's really important.
So, so a multi-page document walking through the condition of the house,
you'll have the boxes you can check.
Yes, no, don't know, you know, who this, this obviously is in favor of the buyer,
(09:16):
you would assume, right?
This is going to help buyers get a better picture of the house that they're buying. Absolutely.
It's going to give them more information before purchasing the home.
Now, it doesn't provide any warranties. It doesn't replace their obligation
to do any inspections on the home.
(09:37):
All of that should continue. None of that changes.
In fact, when you receive a property condition disclosure statement,
now there could be things marked in there which would give the buyer knowledge
privilege before signing a contract,
which they may want to investigate further and most likely should investigate
further because now they're on notice of whatever that issue may or may not have been.
(10:02):
So it, it, it, I think it increases the, the, the responsibility of the buyer
to do their due diligence. Love it. Absolutely.
Love it. So, so they're going to be a little bit made more,
where what if, what if something's discovered after the fact that they buy the
house, it wasn't disclosed, they go up into the attic,
(10:25):
you know, maybe they didn't do their due diligence and get a home inspection,
or maybe they did in the home inspector missed it, but let's say they find something
that should have been disclosed on that report after the fact,
do they have any recourse?
So there's two timeframes we should be looking at here. Okay.
The law change says we have to fill out the property condition disclosure statement
(10:47):
seller and provide that to buyer before he signs the contract.
Now, from the date you sign the contract to the date you close,
if the seller finds out something in that timeframe, they're obligated under
the law to provide an updated disclosure.
Got it. Okay. So they come into knowledge of something during that timeframe,
(11:09):
they would have to disclose close that and provide an updated property condition
disclosure to the buyer.
Once you close, okay, after that, unless there was some active concealment, fraud.
Some misrepresentation that occurred, then you bought the house.
(11:34):
So at that point, everything due to the merger doctrine, everything would merge
into the deed and then they own the property.
But if there's misrepresentation or if there's a fraud, that would create a
cause of action, which then you could decide, you could consult an attorney,
and then you determine whether or not it makes sense to bring a lawsuit or not. To litigate.
(11:56):
Okay. Litigation, yep. Gotcha.
Very cool. So there could be some, you know, this can be used against a seller
potentially, depending on the circumstances.
I'm not saying that it, you know, most of the time, well, but sellers should
think when they fill this out and make sure that they're filling it out accurately.
Absolutely. Absolutely. In our office, we've been discussing that and what that
(12:19):
means and, and how early in the process that we might be now brought in.
We might be brought in very early in the process now to discuss these statements.
Actually, I was going to ask you that. Is this something they should be filling
out now with their attorney or something they fill out and knowing that their
attorney will see it and review it at some point?
(12:42):
I think every situation might be a little bit unique on that,
but I do think that before they release it, they can fill it out themselves.
If they have questions, they should consult their, their counsel on it.
If they are confident about their answers and because again,
it's based on their actual knowledge.
The best of their knowledge. Yeah. So, uh, their actual knowledge.
(13:04):
So, so if they fill it out and they're, they don't have any questions, then fine. fine.
But if they want to discuss it with the attorney, find out what it means,
it might behoove them to do so. So they understand their liabilities.
I would recommend it. I would, I would absolutely recommend it. Okay.
Yeah. It seems like that's something I would recommend, you know,
to a seller myself would be, you know, you might want to consult your attorney.
(13:28):
If there's anything even remotely iffy on this that you're filling out that
you're not sure of how you should fill it out. Correct.
And we're anticipating that there's going to be a lot more involvement with
that because it's kind of scary to fill that form out. There's so many questions on it.
And, and people may not know exactly how they should answer it.
And again, you can be sued for anything, right?
(13:49):
So even, even though you answered it to the best of your knowledge,
if it's discovered after the fact, they may believe that you knew,
and then they would bring a lawsuit and they would have to prove that,
that the seller had actual knowledge and then misrepresented that on the form. Right.
Which, which could be tough to prove, but with a shark arc of an attorney sometimes.
(14:11):
It is difficult to prove, but again, every situation would be different.
And I think that at least in our firm, that's one, I think, advantage of our
firm is that we can do both.
We litigate and we do real estate.
So we have the ability to analyze that from both sides of the fence before and after.
(14:31):
Yeah, that's great. I can see how that'd be super helpful in us with this coming up for sure.
Absolutely. As representing the buyer and their contract, would that be part
of your contract review is to also
take a look at the property condition disclosure and give them advice?
Absolutely. Because it's both sides of the coin now.
So when we receive one, we're going to want to look at that probably more so
(14:54):
on the buyer because we want to look at it and make sure that there aren't any
questions that we could be advising our clients saying, hey,
you may want to double check this. You may want to follow up with this.
You may want to have a consultant go out and look at this.
If there's anything that's not filled out on it and empty, the current case
law that I've seen in these situations.
(15:14):
So seller provides property condition disclosure statement.
That statement leaves certain questions blank.
Buyer signs, proceeds with the deal, closes, later finds out those blank questions,
there were issues there, and they've tried to bring lawsuits saying,
hey, they misrepresented the facts here.
(15:37):
And the courts have said they've denied those cases.
They've dismissed those clauses of action because the basis of the dismissal
was the fact that the buyer would have to prove not only that they misrepresented something,
but they also have to prove that they detrimentally relied on it.
(15:57):
And so if it was blank and they accepted it, the court said there's no detrimental
reliance on that at that point. So if you see something missing,
it's still caveat emptor, buyer beware, you still need to follow up and do your due diligence.
That's good to know. So if you see some blank spaces on that property condition
(16:18):
disclosure, your instinct is to pick up, call the other attorney and say,
hey, this isn't filled out in full.
You need to get this done for us. Absolutely.
It actually raises more questions than it.
Yeah. Yeah. It's like a giant red flag. I thought of a scenario years ago where
this actually came into play. Oh yeah?
A little bit. Yeah. Well, not a little bit, a lot actually, where I think I
represented, yeah, I did the buyer on the house and the buyer moved into the house.
(16:42):
There was, you know, property condition disclosure back then was waived. Yeah.
$500 credit was given at closing. And if I recall correctly,
a contractor came to the door out of a courtesy call to check on prior work done.
And it had something to do with flooding in the basement and the buyer,
(17:04):
and I'm assuming inspector at the time missed that at some point,
this basement had actually flooded.
So now here's a contractor just coming back, trying to either,
you know, establish more work or, or just be great at his job and, and check.
And it was a new bot. It was a new owner in there.
It was like, what do you mean flooding in the basement? You know?
So yeah, I could see how this would, you know, come in handy and I can also
(17:27):
see how it could could generate issues down the line with, with things like that.
Correct. Well, and sellers are going to really have to, you know,
admit when things are, things have gone wrong, because that's a perfect case where if they.
Checked no prior flooding, they have a very strong case because they clearly
(17:47):
had worked on due to flooding that the seller had had no had knowledge of flooding in the basement.
And I think that would be, you know, potentially a lawsuit that could be brought
in that situation again how those questions are phrased
and how you answer them all of that would come that would
be analyzed in the courts yeah a typical
(18:08):
or not shouldn't say typical but a way that has come up
that i've seen is that there were remedies that were done a year earlier so
they fixed the issue a year earlier and the question that was asked wasn't specific
about flooding it was about current or something like that right and they were
analyzing how the question was phrased. Yeah. And so.
(18:29):
They couldn't prove they had actual knowledge from the correction forward of
any flooding. So the owner filled it out saying, I don't have any water.
Because the question is, did you have any water in the basement or something?
The answer was no. So now they're challenging that.
So that's kind of hard to say because since he's fixed it, he's fixed the issue.
So he answered it to his actual knowledge and to the best of his ability.
(18:51):
Right. So how far back do you have to go back to explain these things now to
avoid an issue? I think what I'm picking up here is consult your attorney.
And if everybody could just be a little honest. And really, that's the drive behind this.
The drive is let's have some honest disclosure about what these houses are.
(19:14):
And buyers need to understand too, when you're buying a home,
it's not new construction.
If you're buying a used home, it's a used home. It's going to have problems.
You can't expect that everything's going to be perfect. There's going to be issues.
That's a good question. Does new construction require a property condition disclosure?
No. Good to know.
(19:37):
Well, Rick, do you have any other final questions? Oh, you would think I would,
Mike, as you told me to have final questions nearby.
But if you could vamp for a moment.
If it's helpful, you want me to do a little recap just so people know? Sure.
So again, the property condition disclosure statement has been updated and amended
(20:01):
by New York State effective March 20, 2024.
It removes the seller's ability to provide a $500 credit.
For not filling it out and actually creates potential liability for actual damages
if you fail to fill one out.
So the obligation now is seller, you have to fill out property condition disclosure.
(20:24):
You have to provide it to the buyer before buyer signed the contract.
And that's the property condition disclosure side of it.
That form will have additional questions with regards to flood issues,
which will also have to be answered.
And Mike, as I went down the questions Questions that I'd written down, Mr.
Lindar's answered all of them already for us. All right. Fantastic.
(20:47):
Ian, why don't you tell our audience where they can get in touch with you? Sure.
So our office is on 1136 Route 9 in Wappingers Falls.
Our phone number is 845-298-2000.
And we do have a website. That's stengerglass.com. And all our information's there.
(21:08):
Areas of law we practice. this is all on the website. Yeah, you cover just about everything.
And for the record, I've been using Ian on real estate deals for quite a while now.
Just a tremendous attorney and really appreciate you coming down and sharing this important update.
This is going to impact real estate transactions throughout New York State and
(21:29):
it's important for everybody to know. So I really appreciate you coming down.
Thank you for having me. Thank you very much. And we again appreciate you coming
in the other day and doing that presentation as well. I know we thanked you
privately, but now to thank you publicly just makes us look like better people.
It was fun. It was great talking to people who are going to be dealing with
this law on a daily basis. It's great. We appreciate it, Ian.
(21:49):
Thanks so much. Thank you. All right, guys.
Team Banks, Hudson Valley's Real Estate, X Factor, we're out.
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