On September 22, 2023, Governor Hochul signed into law an amendment to the Property Condition Disclosure Act (PCDA), affecting sellers’ property disclosure obligations regarding the sale of 1-4 family residential real estate properties in New York. As of March 20, 2024, home sellers must now provide purchasers with a completed property disclosure in accordance with Section 462 of the Real Property Law before signing a contract. The requirement does not apply to co-ops, condos and properties located in HOAs.
There were two changes made to the law. The most important of the two is the removal of the seller’s ability to opt-out of providing the PCDS by giving a $500 credit. The second change provides for the inclusion of questions related to flooding and flood related events. The PCDS is required for “Residential real property” which means real property improved by a one to four family dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons.
The PCDS is not required for (a) unimproved real property upon which such dwellings are to be constructed, or (b) condominium units or cooperative apartments, or (c) property in a homeowners’ association that is not owned in fee simple by the seller. The Property Condition Disclosure Act requires the seller of residential real property to provide the PCDS (or copy) to be delivered to a buyer or buyer’s agent prior to the signing by the buyer of a binding contract of sale. Click here to learn more about this recent change.
Given this recent change, we wanted to share a list of Frequently Asked Questions that sellers and homeowners may have about the new PCDS.
Source: NYSAR (New York State Association of Realtors)
Q – When does the amended PCDS go into effect?
A – March 20, 2024. Sellers should not use the amended PCDS prior to that date.
Q – What are the changes to the amended PCDS?
A – There were two changes made to the law. The most important of the two is the removal of the seller’s ability to opt-out of providing the PCDS by giving a $500 credit. The second change provides for the inclusion of questions related to flooding and flood related events.
Q – Where can I get a copy of the amended PCDS?
A – https://dos.ny.gov/property-condition-disclosure-statement-1
Q – What type of property is the PCDS required for?
A – The PCDS is required for “Residential real property” which means real property improved by a one to four family dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons.
Q – Is there any type of property the PCDS is not required for?
A – The PCDS is not required for (a) unimproved real property upon which such dwellings are to be constructed, or (b) condominium units or cooperative apartments, or (c) property in a homeowners’ association that is not owned in fee simple by the seller.
Q – Are there any exemptions for certain types of transfers?
A – Yes. Section 463 of the Real Property Law contains a list of exemptions for specific types of property transfers. Licensees must not advise sellers whether the transfer qualifies for an exemption. A determination if a seller qualifies for an exemption is a legal opinion and the seller must speak with their attorney to determine if any exemptions apply.
Q – When is the new form required to be used? What if the seller already signed the PCDS prior to March 20, 2024? If the seller did not sign the PCDS and elected to give the buyer the $500 credit, do they now need to sign the amended PCDS?
A- Amended PCDS Required
- If the seller has already provided the PCDS to the buyer and the buyer has not signed the PCDS prior to March 20, 2024, the amended PCDS is required. Under this scenario, the seller is no longer permitted to give the $500 credit in lieu of the amended PCDS.
- If the seller has not provided a PCDS (even if signed by the seller prior to March 20, 2024) and a binding contract of sale is entered into on or after March 20, 2024, the amended PCDS is required. Under this scenario, the seller is no longer permitted to give the $500 credit in lieu of the amended PCDS.
Amended PCDS Not Required
- If the seller has already provided the PCDS to the buyer and the buyer signed prior to March 20, 2024, the amended PCDS is not required.
- If the seller and buyer entered into a binding contract of sale prior to March 20, 2024, the amended form is not required. Under this scenario, the seller may elect to give the $500 credit in lieu of the PCDS.
Q – Does the date of the listing agreement impact whether the amended PCDS is used?
A = No. The date of the listing agreement has no effect on whether the amended PCDS is used. However, for all listing agreements or renewals of listing agreements that take place on or after March 20, 2024, the amended PCDS should be used.
Q – When should the PCDS be provided to a buyer?
A – The Property Condition Disclosure Act requires the seller of residential real property to provide a the PCDS (or copy) to be delivered to a buyer or buyer’s agent prior to the signing by the buyer of a binding contract of sale.
Q – Who is responsible for delivering the PCDS to a buyer or buyer’s agent?
A – The seller is ultimately responsible for delivering the PCDS to the buyer or buyer’s agent. Depending on the custom and practice of your geographic area, these duties may fall upon parties representing the seller. For instance, in areas where pre-printed purchase contracts are completed by licensees, this may be done by the listing agent by posting the completed PCDS to the MLS. In other areas where pre-printed contracts are not used by licensees the seller would need to speak with their attorney about when delivery of the PCDS will be made. Regardless, the licensee is only responsible for delivering the PCDS to the buyer or buyer’s agent if they assume or accept the responsibility on behalf of the seller. Licensees should make it clear to the seller if they are assuming the responsibility.
Q – What is the duty of a real estate licensee under the PCDS law?
A – Section 466 of the Real Property Law sets forth the duties of a licensee for both sellers and buyers. If an agent performs the duties and obligations imposed upon him or her pursuant to section 466, the agent shall have no further duties under the PCDS law and shall not be liable to any party for a violation of the PCDS law. The following sets forth the licensee’s obligation.
Sellers: An agent representing a seller of residential real property as a listing broker shall have the duty to timely inform each seller represented by that agent of the seller’s obligations under this article.”
Buyers: “An agent representing a buyer of residential real property, or, if the buyer is not represented by an agent, the agent representing a seller of residential real property and dealing with a prospective buyer, shall have the duty to timely (in any event, before the buyer signs a binding contract of sale) inform such buyer of the buyer’s rights and obligations under this article.
Q – Does a listing agent need to provide a blank copy of the PCDS to the seller?
A – NYSAR recommends that a copy of the PCDS be provided to the seller at the time the listing agreement is signed. The PCDS may be provided electronically or by hard copy.
Q – Can the completed PCDS be done electronically?
A – Yes. The PCDS may be signed and delivered electronically. A PCDS signed by the seller may also be uploaded to the MLS with the seller’s consent.
Q – Is a listing agent liable if their seller client does not provide a PCDS to the buyer or if their buyer client does not receive one from the seller?
A – No. A licensee will not be liable for the failure of a seller to deliver the PCDS to the buyer or buyer’s agent. The licensee is only required to advise the seller and/or buyer of their rights and obligations under the PCDS law.
Q – Should a real estate licensee assist the seller in filling out the form?
A – No. The PCDS specifically instructs the seller to answer all questions based the seller’s actual knowledge and to “complete this form yourself.” Furthermore, the form states: “Seller’s Statement: The seller makes the following representations to the buyer based upon the seller’s actual knowledge at the time of signing this document. The seller authorizes his or her agent, if any, to provide a copy of this statement to a prospective buyer of the residential real property. The following are representations made by the seller and are not the representations of the seller’s agent.” If the seller has any questions about how to fill out the PCDS they need to consult with their attorney.
Q – What happens if a seller fails to provide the form?
A – NYSAR is unsure what liability a seller may be subject to for failing to provide the form. Sellers that do not provide the form should only do so under the advice of their attorney. Likewise, a buyer or buyer’s agent that does not receive a PCDS from the seller should speak with the buyer’s attorney as to what remedies the buyer may have. Licensees must not advise sellers whether they should or should not fill out the PCDS. It is likely this question will be answered through litigation or the legislature amending the law.
If you have any questions, feel free to contact us or reach out to your real estate attorney.
