Chapter 13: Sellers Property Disclosure Flashcards

Chapter 13: Seller's Property Disclosure Flashcards

The Law defines a number of exceptions where the SPD

does not have to be completed:

• Transfers that are the result of a court order.2. Transfers

to a mortgage lender that result from a buyer's default and subsequent foreclosure sale.3. Transfers from a co-owner to one or more other co-owners.4. Transfers made to a spouse or direct descendant.5. Transfers between spouses that result from divorce, legal separation, or property settlement.6. Transfers by a corporation, partnership or other association to its shareholders, partners or other owners as part of a liquidation plan.7. Transfer of a property to be demolished or converted to non-residential use.8. Transfer of unimproved real property.9. Transfers by a fiduciary during the administration of a decedent estate, guardianship, conservatorship or trust.10. Transfers of new

construction that has never been occupied when:a. The

buyer has received a one-year warranty covering the constructionb. The building has been inspected for compliance with the applicable building code or, if none, a nationally recognized model building codec. A certificate of occupancy or a certificate of code compliance has been issued for the dwelling.Rider AddendumCan be attached to the standard form, which allows the sellers to disclose anything that didn't fit the categories on the form.SPD Page 101. Legal issues2. Additional material defects to the property, dwelling, or fixtures that the seller may be aware of that aren't covered elsewhere on the form3.Attachments4. Seller signature block5. Executor, Administrator, Trustee signature block6. Receipt and acknowledgement by buyer Mechanical SystemA system having moving parts. Anything with moving parts can be considered this.SPD Page 21. Seller's expertise2. Ownership/ occupancy3.Condominiums/ planned communities/ homeowners associations4. Roof and attic Disclosed DefectsMust be material in nature. This doesn't include disruptive neighbors that are loud, etc. Not all problems with a house are serious and a seller needs to disclose only those considered material. A broken window that just needs replacement is much different from a broken septic system that needs to be completely replaced.

SPD Page 61. Heating system2. Air conditioning system3. Electrical system Seller's Property Disclosure Statement (SPD) A seller must give a completed disclosure statement to the buyer before they both sign the purchase agreement.PA's Real Estate Seller Disclosure Law (RESDL) 68 Section 7301, it states that home sellers must advise potential buyers before a sale is completed about known material defects that aren't readily seen. This includes such things as structural defects, plumbing problems, and even title clouds. The purpose is to make sure that residential buyers known what they are purchasing and to discourage sellers from hiding any flaws or problems.Residential Real Estate TransferA property where not less than one and not more than four residential dwelling units are involved.Material DefectA problem with a residential real property or any portion of it that would have a significant adverse impact on the value of the property or that involves an unreasonable risk to people on the property. A material defect is a problem that cannot be corrected with simple maintenance and that will require significant effort to repair.Seller's Expertise SectionThe seller must respond to three different questions regarding his or her experience as a person with a construction background, landlord, or real estate agent. If the seller has expertise in any of those areas, he or she must explain the level of expertise. Sellers with experience in these areas will be held to a higher standard of reporting.Seller's Property Disclosure Statement Addendum (SDA)This is a one-page document used to update or make additions to the Seller's Property Disclosure Statement.The seller will write in the property address and his or her name at the top of the page.The seller will then do the

following:1. Note how many dwelling units, heating

systems, water service meters, air conditioning systems, water heaters, and electrical service meters are on the property.2. Identify the Section Numbers, Topics and/or Units in the SPD that the seller is making changes or additions to and write in the applicable changes or additions in the spaces provided.3, Acknowledge that all other terms and conditions of the Seller's Property Disclosure Statement remain unchanged and in full force and effect.4. Sign and date the form in the spaces provided.Below the seller's signature area are spaces for the buyers to sign and date, thereby acknowledging receipt of the changes to the original SPD document.The SPD (Seller's Property Disclosure Form) Often generates a lively discussion when two or more licensees get together to talk shop. This may be due to the massive length of the form itself. It's important for

salespersons to understand the form, so they can answer any questions the seller may have when filling it out. It's important to remember however, that it is the job of the seller and not the real estate salesperson to fill out the form.SPD Page 71. Other equipment and appliances2. Land/soils

SPD Page 31. Basements and crawl spaces2. Termites/ wood-destroying insects, dry, pests3. Structural items4.Additional/alterations Standard FormCovers the property's structure, such as the roof, basement, foundation, windows, and walls. The form also requires that the seller let a buyer know if the house has been treated for termites or has had water or sewage problems. Buyers must be told if the house has been remodeled and if the mechanical systems are in working order. If appliances are included in the sale, then the seller needs to provide the condition of each appliance. If there are hazards or environmental issues on the property, the seller must also disclose this information. In addition, any title, insurance, or financial issues must be disclosed Psychological DamageIn the case of Milliken v. Jacono, the PA Superior Court found that sellers don't have to disclose the home's bad history to the buyers. The house at issue was the site of a murder/suicide. The sellers had purchased the home from the deceased owner's estate. Despite court decisions in other states holding that psychological damage did need to be disclosed, the Pennsylvania court came to the opposite conclusion. In Pennsylvania, sellers only need to disclose identifiable damage.Seller's Property Disclosure Form Cover Page At the top of page 1, the seller is required to enter the property address/location and his or her name in the spaces provided.The paragraphs below the spaces give information regarding the Real Estate Seller Disclosure Law. The first paragraph defines a residential real estate transfer as a property where not less than one and not more than four residential dwelling units are involved.The seller is instructed to check yes, no, unknown (Unk), or

not applicable (N/A) for each SPD question:

• Seller is to check N/A when a question doesn't apply to

the property2. seller is to check unknown when the question does apply to the property or the seller is not sure of the answer SPD Page 51. Sewage questions continue on the top of this page2.Plumbing system3. Domestic water heating SPD Page 91. Hazardous substances and environmental issues2.Miscellaneous SPD Page 41. Water supply2. Sewage system Other points covered on the front page include the

following:

• Disclosures for condominiums and cooperatives are

limited to the seller's particular unit.2. Disclosures regarding common areas or facilities are not required, as those elements are addressed in the laws that govern the resale of condos and coops.3. The SPD is based on the seller's knowledge of the property on the date it was