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Selling a house: disclosure of material defects

Houses can be complex structures, with many systems that are susceptible to defects that are not readily apparent to a prospective buyer. For example, a basement that leaks after a heavy rain may not appear to be wet in August or after a period of no rainfall. Similarly, a buyer who inspects a house in the summer may not notice that the furnace does not work properly. In order to assist persons buying a home and prevent sellers from hiding known defects in a house, Pennsylvania has enacted the Real Estate Seller Disclosure Law.

The law applies to all sales of residential real estate except sales by a trustee or other fiduciary and new home sales if the seller extends a one year warranty. In the case of most other sales of residential real estate, the seller must "disclose to the buyer any material defects with the property known to the seller." The disclosure is made by filling out a form that is prescribed by the State Real Estate Commission.

The required disclosures are too numerous to be listed in this blog post, but they include structural problems, status of the plumbing, heating and electrical system and presence of hazardous substances. The completed form must be physically delivered or mailed to the buyer. While the seller is required to disclose all defects within his or her knowledge, the seller is under no obligation to undertake any "specific investigation or inquiry."

Delivery of the form precludes a legal action by the buyer against the seller for damages caused by any defect that is listed on the disclosure form. If the seller willfully fails to comply with the statutory disclosure requirements, he or she is liable for the buyer's actual damages.

Completing the real disclosure form is not difficult, and many sellers either complete the form themselves or do so with the help of the selling agent. However, the process for either asserting a claim for failing to disclose a defect or defending against such a claim can be very complex, with some cases requiring expert testimony from engineers or architects.

Any person contemplating a claim for a defect in a residential property, or any person who is the subject of such a claim, should consider obtaining legal guidance about their situation so they can take appropriate action to protect their rights and interests.

Source: 2014 Pennsylvania Consolidated Statutes, Title 68, Chapter 73, "Seller Disclosures," accessed March 28, 2015

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