If you have ever bought or sold a home, you are probably familiar with a seller disclosure form. This document conveys information about the property to a prospective purchaser, including details like when the roof was installed, any history of water in the basement, and HVAC system details. While sellers should complete this document thoroughly, to the best of their knowledge and ability, this is not always the case. What are your options if you have purchased a property only to have significant issues not captured on the seller disclosure arise? You may have recourse under Pennsylvania’s Real Estate Seller Disclosure Law.
What is Pennsylvania’s Real Estate Seller Disclosure Law?
The Pennsylvania Real Estate Seller Disclosure Law, 68 Pa.C.S. § 7301, et seq. (“RESDL”), applies to most residential real estate transfers and was created to define the disclosure obligations of sellers. Specifically, it requires them to disclose the property’s known “material defects with the property known to the seller” in 17 key areas. Most realtors utilize the Seller’s Property Disclosure Statement, which was approved of by the Pennsylvania Association of Realtors (PAR). Moreover, although the seller is not obligated to make any specific investigations to complete the property disclosure statement, the seller cannot make any representations that he knows or has reason to know are false, deceptive or misleading and cannot fail to disclose a known material defect.
The RESDL was passed in 2000. However, traditionally, buyers had little to no protection from any recourse for defects discovered in connection with the purchased property, i.e., a caveat emptor or “buyer beware” situation. Sellers were not required to disclose material defects, and buyers had to seek out and uncover any defects, major or otherwise, on their own prior to making a decision.
Today, most states require some seller disclosure, as it protects both the buyer and the seller. The buyer no longer must serve as a super sleuth, and the seller, if they properly disclose, has liability protections should an issue arise down the road.
Limitations to the Pennsylvania Real Estate Seller Disclosure Law
While the RESDL was enacted to, among other things, protect the purchasers of a residential property, those protections and the recourse established against the seller is not limitless. Limitations include the following:
- Timing – An action under the RESDL must be commenced within two years after the date of final settlement for the property (68 Pa.C.S. § 7311(b)). In the event a purchaser seeks to bring action beyond the two years following final settlement, the buyer must pursue the claim under an alternate legal route like a breach of contract or fraud; an experienced litigator can determine if either path is valid.
- Exception for Administrators, Guardians and Conservators – The RESDL does not require the seller of a residence to provide disclosure of the 17 key areas if the sale of the property was done in the course of the administration of a decedent’s estate, guardianship, conservatorship or trust (68 Pa.C.S. § 7302(a)(1). This means that if you are, for example, the executor of a relative’s estate charged with selling a residential property, you do not have an obligation to complete the seller disclosure form. On the flip side, if you are purchasing a property from an estate, anticipate any disclosure provided may reflect limited knowledge of the property, if any, as the seller was not the property owner residing in the property.
- Withholding details not considered a “material defect” – While a good rule of thumb is to disclose information that’s relevant or useful to the buyer in one of the extra spaces found in the seller disclosure form, the law states that the defect must be objectively physical. Purchasers should be sure to complete due diligence on their prospective property to see if it’s made headlines or has any skeletons in its proverbial closet that may impact its value now or in the future.
I am having property issues – now what?
Suppose you recently bought a house, worked with a realtor, and followed best practices. You signed an agreement of sale, did your due diligence, closed, and are happily living in your new residence. During some recent basement renovations, you took that wallpaper off one of the posts and uncovered water stains.
Annoyed, you open your filing cabinet and review the seller disclosure, which mentions nothing of water damage or flooding in the basement. You have difficulty believing the damage was unknown, and the wallpaper seems like a total cover up. Now, you’re fearful that the next big storm will damage the new, expensive flooring you just installed!
While you have a potential case (based on the above criteria – within two years, not sold as part of an estate, and the issue is a material defect), the buyer bears the burden of proving the previous owner and possibly their realtor knew about the problem. As the law notes, “any person who willfully or negligently violates or fails to perform any duty prescribed by any provision of this chapter shall be liable in the amount of actual damages suffered by the buyer” (68 Pa.C.S. § 7311(a)). 
Proof in this case, and most often, will be evidentiary. Utilizing the seller disclosure form and context clues, you will need to showcase steps taken to mislead or conceal the material defect, or that the defect is so major that the seller had to have known about it. This will likely include documenting the issue you have unearthed (including photos). Additionally, it may involve procuring the testimony of industry professionals to share their knowledge and expertise about home repair and maintenance to help develop or substantiate your narrative.
Some buyers also seek to sue the seller’s realtor in the process, especially if the material defects were costly. However, an agent of a seller cannot be liable for any violations of the RESDL unless the agent had “actual knowledge of a material defect that was not disclosed to the buyer or of a misrepresentation relating to a material defect” (68 Pa.C.S. § 7310).
How to avoid seller disclosure issues
There are many steps a homebuyer should take when considering their real estate purchases to help avoid heartache (and litigation) in the future:
- Carefully read the seller disclosure and seek clarification – If something on the seller disclosure is unclear or missing, the buyer should ask questions. The seller may be intentionally vague in response to bolster the home’s value or sell before a problem grows. If a professional provided services to remedy an issue, ask for records or contact the provider to gain understanding.
- Get a professional home inspection – While not legally required under the law, professional home inspections can help validate a seller disclosure as well as potentially uncover hidden issues of which the seller was unaware, i.e., an otherwise unknown material defect or one the seller believed had been corrected previously (68 Pa.C.S. § 7309). If, for some reason, like a bidding war, the seller agrees to accept an offer if the buyer is willing to waive inspection, the buyer assumes this risk in not doing due diligence.
- Consider a real estate attorney in the buying process – In addition to taking a hard, close look at all contractual documents, a residential real estate attorney can help you better understand future implications (like litigation options) and negotiate issues unearthed in a seller disclosure or inspection. While realtors also play a critical role in your transaction, their commissions are contingent on closing occurring. An attorney can provide independent, unbiased counsel and, when due diligence warrants, advise you to walk away from a property that may not be in your best interest now and in the future.
Support for Pennsylvania Seller Disclosure Law Litigation
If you are a homebuyer experiencing issues with your property that may violate the Pennsylvania Real Estate Seller Disclosure Law, please get in touch with a member of our Litigation & Trial Practice team to discuss your unique situation and potential resolutions.
