To Disclose or Not to Disclose: What’s the Smarter Move?
It’s natural to want to put your property in the best possible light when you go to sell. In addition to feeling some embarrassment over problems your home might have, you may be worried you won’t be able to sell the property at all if you tell potential buyers all about the problems the structure has.
And while New York state law does require you to make disclosures, the way the form is set up, along with the penalty for failing to do so, is such that it may be smarter not to do it.
See also: Residential Property Sales: A Seller’s Disclosure Requirements.
The buyer has the right to hire an inspector.
First thing’s first: you’re probably not going to end up selling a home without most buyers being fully aware of the defects. Savvy buyers hire inspectors. If they don’t like the condition the property is in they can withdraw their offer, or make it contingent upon you paying to have certain issues fixed.
So if, when making the “to disclose, or not to disclose” decision, your moral obligation to the buyer is one of your concerns, you might want to rest easy. An inspector might not find some of what’s happened in the home in the past (such as whether fuel tanks were ever stored on the property), but he or she should be able to find any major issues likely to impact the owner today.
See also: What Are the Most Common Property Disputes During a Purchase?, and 6 Things The Inspector Should Check in a Long Island Home Inspection.
Sellers must complete a standard disclosure form.
Technically you are supposed to complete a standard disclosure form with 48 questions about the condition and history of your home. You run down the list answering: “yes, no, n/a or unknown” to each question until you produce a document which theoretically gives the seller some decent ideas about the property and its issues.
If you fail to disclose you will have to pay the buyer a $500 credit at closing. Some critics of the disclosure law points out it’s doing nothing more than asking you to reimburse the buyer for the cost of hiring an inspector.
See also: Flipping Houses: 3 Tips From an NY Real Estate Lawyer.
Some sellers choose to forgo the form.
Because the penalty is so small some sellers choose to just eat the $500. This happens because filling out the form can increase your liability in the event something goes wrong. This is especially true if you think something is true about the property or its condition that’s actually false. If that thing causes a problem later, the seller could choose to accuse you of intentionally concealing the problem.
For example, one of the questions the form asks is, “Is there asbestos in the structure?” You could answer “no” because you’ve never known about any asbestos. Later, if a homeowner drills into his or her ceiling and ends up with a mouthful of asbestos they have grounds to sue you. If you don’t make disclosures and leave it up to the buyer’s inspector you close that door.
It’s important to note that paying the $500 doesn’t release the seller from all liability. It just reduces it. Partial disclosure of the issues you do know about for sure is probably wise, even if you don’t use the form to do it.
See also: Do Buyers Need a Realtor if they Hire an NY Real Property Lawyer?
Of course, every situation is different, which is why it pays to have a Long Island real estate lawyer on your side. The Law Offices of Sami Perez is experienced at mitigating liability risks for sellers. For a confidential consultation, email Ms. Perez at [email protected].