It's time for Pennsylvania home sellers to sharpen their pencils. As a result of a new law enacted in Pennsylvania, the Pennsylvania Real Estate Seller Disclosure Act (RESDA), sellers are now required to complete more paperwork. The RESDA, which took effect on September 2, 1996, requires home sellers to provide the buyer of their homes with a comprehensive, detailed, written disclosure of the condition of the property to be sold. The purpose of the RESDA is to assist prospective buyers in evaluating the property they are considering to purchase.
Certain types of transfers are exempt from the requirements of the RESDA, including, but not limited to, transfers between spouses resulting from a decree of dissolution of marriage or a decree of legal separation, transfers from one co-owner to one or more other co-owners, and transfers by a fiduciary in the course of the administration of a decedent's estate.
Essentially, the RESDA requires sellers to disclose to the buyer any "material defects" with the property by completing a property disclosure statement prescribed by the RESDA. A "material defect" is defined in the RESDA as "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."
The RESDA does not require that a seller obtain an inspection. It does, however, require the seller to disclose to the buyer all known material defects about the property that are not readily observable. Buyers should know that the protections of the RESDA are not a substitute for inspections or warranties the buyer may obtain. Nor is the disclosure statement a warranty by the seller, or a warranty or representation by the listing or selling real estate broker or their agents. The disclosure statement must be given to the buyer prior to the signing of a written agreement of sale and must be signed and dated by the buyer indicating his receipt and acknowledgment.
The disclosure form, though not exhaustive, specifically includes questions about most all areas of concern to buyers, including the condition of the roof, basement, water and sewage systems, plumbing, heating and air conditioning, electrical system, appliances, smoke detectors, structure and even the land surrounding the house. If any of the information completed by the seller subsequently becomes inaccurate, the seller is obligated to notify the buyer. The RESDA does not specify when this obligation to notify the buyer ends, but it is believed to expire at closing.
In addition to the obligations imposed upon home sellers, the RESDA also places certain duties upon the seller's real estate agent. That is, real estate agents are obligated to advise the seller of the seller's responsibilities under RESDA and must also provide the seller with the disclosure form.
Homeowners who thought they knew everything about their property may be surprised to see just how much they do not know when they sit down to complete the RESDA disclosure form.
Only time will tell whether the additional disclosures and paperwork imposed upon home sellers by the RESDA will lead to more informed buyers and less post transfer disputes between sellers and buyers.