WHAT IS IT AND WHY DO YOU NEED TO PROVIDE IT?
Sellers of real property in North Carolina have a lot of obligations to fulfill before selling their property such as ensuring they can provide good title to the buyer and making needed repairs. However, there is another obligation many homeowners do not realize exists, especially those selling their home without the aid of a licensed real estate agent.
North Carolina General Statute 47E, known as the Residential Property Disclosure Act, requires owners of residential real property to provide purchasers of such property with a Residential Property and Owners’ Association Disclosure Statement. This requirement applies to the sale, exchange, option, and lease (where the tenant does not already occupy the dwelling) with an option to purchase the property.
A disclosure statement is not required for some transactions, including the sale of a newly constructed dwelling which has never been inhabited and a lease with option to purchase where the lessee already occupies the dwelling.
WHEN MUST IT BE PROVIDED?
The owner of the property must deliver the disclosure to the purchaser before or at the time the purchaser makes an offer to purchase, exchange, option, or exercise the option to purchase the property. If the disclosure statement is not provided at this time, the purchaser may cancel the contract within three calendar days after receiving the disclosure statement or within three calendar days following execution of the contract, whichever occurs first. To cancel the contract, the purchaser must either personally deliver or mail the written notice of the cancellation to the owner or owner’s agent. There is no penalty to the purchaser for cancellation in this situation, and the purchaser will be entitled to a refund of any deposits made.
WHAT DISCLOSURES ARE REQUIRED?
Developed by the North Carolina Real Estate Commission to comply with the requirements of N.C. General Statute 47E, the disclosure statement contains 37 questions detailing characteristics and conditions of the property including structural components of the dwelling, mechanical systems, present and/or past infestation of wood-destroying insects, zoning laws, restrictive covenants, building codes, encroachments, and the possible presence of lead-based paint, asbestos, radon gas, methane gas, underground storage tanks and hazardous materials. Additionally, the statement requires the disclosure of whether or not the property is conveyed subject to one or more homeowner’s associations and obligations to pay assessments or dues.
When answering each question, the owner must either fill in the requested information or mark the appropriate box with Yes, No, or No Representation. If the owner marks "Yes" for any question, they must either describe the issue or attach an expert’s report describing the issue. Marking “No,” to any question means the owner is stating they have no actual knowledge of any issues. Here, if the owner knows there is a problem and marks “No”, they may be liable for making an intentional misrepresentation. By marking "No Representation,” the owner chooses not to disclose the conditions or characteristics of the property, even if they have or should have actual knowledge of them.
CHANGES IN CIRCUMSTANCES?
If after completing a disclosure statement, something occurs making the owner’s statement inaccurate, they must promptly correct and provide the purchaser with a corrected disclosure statement reflecting the new characteristics and conditions of the property.
REAL ESTATE AGENT DUTIES?
Real estate agents in residential real estate transactions have the duty to inform their clients of their obligations and rights under the Residential Property Disclosure Act. As long as the agent does this, they are not responsible for an owner’s refusal to provide a purchaser with a disclosure statement. However, a real estate agent must disclose any material facts about the property that they know or reasonably should know about, regardless of an owner’s responses on the disclosure statement.
Published by Cynthia Pela on March 6, 2017