Posts Tagged ‘Personal Finance’

Seller’s Disclosures And The Home Inspection In New York Closings

March 16th, 2022

SELLER’S DISCLOSURES AND THE HOME INSPECTION

One of the more frustrating, but necessary elements of representing a seller or buyer of a house is getting through a home inspection. In order to better deal with this ordeal we must first look at why it is so important and then look at the best way to educate the parties as to what to expect. In order to avoid any problems during the process it is best for the parties to be forth right and make sure it is clear to all the parties as to what their obligations are.

WHY IS THE INSPECTION SO IMPORTANT

New York is what is known in legal jargon as a “Caveat Emptor state” which literally means “Let the buyer beware” This has been handed down through old English common law. The buyer in New York must insure that everything with the property is satisfactory before they sign the contract and unless the contract sets forth conditions which seller must correct the buyer is purchasing the property “AS IS”. There are certain customary conditions which seller will insure, such as the treatment of termites, and most contracts will provide that appliances, plumbing, heating and electric systems will be in working order AT THE TIME OF CLOSING. There are no guarantees or warranties provided. The electric system may be working at the time of closing, but a buyer may discover after they move in that the 60 amp service that was adequate for the 85 year old seller, who has owned the house for 70 years, is not adequate to run an air conditioner and charge a cell phone at the same time. There is no recourse once the contract is signed. First time buyer’s usually are surprised to find this out and I am often asked “What happens if the washer breaks the day after we close” of which I reply “Welcome to home ownership”.

ARE SELLERS REQUIRED TO DISCLOSE

Case law has created exceptions to the Caveat Emptor rule. Even though the buyer must do their own due diligence before purchasing a house, the seller can not intentionally conceal defects. So if a Seller knows of a defect they can not purposely cover it up and make it difficult for a buyer to discover. A Seller must also disclose any material facts which a reasonable buyer would want to know before committing to buying a property. The clearest example would be if there had been a horrific crime, such as the murders of the Difeos in the famous “Amityville Horror” house. It would be reasonable to assume that a buyer would want to know of such an occurrence. New York courts have found that a seller must even disclose the fact that a house has a reputation of being haunted, even though there have been no proven occurrences of any hauntings. The New York Supreme Court found that the fact that the house had a reputation in the community as being haunted required that seller, and their agent disclose this to potential buyers. I recently had a case where a buyer was purchasing a large estate and a new survey disclosed a small cemetery on the property. The grave markers were from the 18th and 19th Century. This was never disclosed and was in a wooded section of the property and not easily discovered. My client’s loved the property and actually found the presence of the cemetery “cool” so it did not effect their decision to purchase the home, however, if my client’s were not so open minded I am certain that we would have had reasonable cause to terminate the contract due to seller’s failure to disclose.

Visit erikbockmann.com to find out more regarding erik bøckmann