The Property Condition Disclosure Act (PCDA)

New York Real Property Law — Chapter 50, Article 14

Effective March 20, 2024, the AMENDED provision will “Compel all sellers of residential property to complete and deliver a Property Condition Disclosure Statement (“PCDS”) to a buyer prior to signing a contract of sale”. As the initially invoked Statute, this Statute revocation will not apply to a Cooperative Unit, Condomium Unit, or Commerical Property Transaction. In addition, any transaction where a Trust, Estate, or Lender (REO) is “selling”, will also not be affected, (as they never fell under the mandate of the initially passed Statute).

The PCDS contains “56 questions” requiring answers from the Seller addressing issues pertaining to the:

STRUCTURAL, MOLD, TITLE CLAIMS, FLOOR DAMAGE, MOLD DAMAGE, ENVIRONMENTAL ISSUES, OR HAZARD EXPOSURE (LEAD, RADON, ASBSETOS) of the premises. A completed and signed copy of the PCDS is to be attached to ALL contracts of sale (where the Statute is applicable to the transaction).

Essentially, the original “caveat emptor” ideology (Latin for “let the buyer beware”) has been eradicated in New York State. The Purchaser of a 1–4 Residential home in New York State has been afforded its “VEHICLE analagous” Lemon Law Protection.

With respect to the content of the PCDS, a Seller’s responses include: “YES, NO, UNKNOWN, or NOT APPLICABLE”… and can result in post closing legal repercussions for the Seller in the event any known information was purposefully witheld; and any/all known conditions were intentionally not “disclosed”.

It is important to emphasize that that the contract of sale itself can contain SUPERCEDING VERBIAGE, i.e., “as is”; as well as detailed provisions addressing a particular issue, i.e. leaks, mold, etc…that would absolve and insulate a Seller from such items, (irrespective of the response in the PCDS; unless the response was deliberately untrue), provided the contract provision contains “affirmative representations” (as reflected in my contracts) to the effect that: “Buyer acknowledges the mold in basement, and is proceeding to closing, notwithstanding; and Seller has no obligation to remediate said mold”.

Also, I would suggest, that this new mandate in NO WAY restricts or prohibits the Purchaser from having a Home Inspection performed; and that now, more than ever, a Seller would take solace in knowing that their Purchaser is deferring to such a comprehensive report… and refuse to consummate a sale with a buyer who failed to have an Inspection performed.

That said, what if the findings in the Report, conflict or differ from the Seller’s “answer” in the PCDS? Alas, this is but one of the MANY “hiccups” we will be forced to encounter and engage as this new regulation “presents itself” in an ACTUAL SETTING… not simply “on paper”.

In furtherance, ALL LISTING AGENTS MUST NOTIFY THEIR SELLER OF ITS OBLIGATION TO PROVIDE THE PCDS TO POTENTIAL BUYERS. The buyer’s broker must reciprocate by placing their buyers on ACTUAL NOTICE that they have a statutory right to receive the completed/signed Disclosure from the Seller.

As with all other newly implemented regulations, a “learning curve” is immenet… and confusion is inevitable.

What should contracts being executed during the “gap period” (now…and between March 20, 2024) reflect as far as the Article 14 Disclosure?…” if closing occurs subsequent to March 20, 2024, then deference must be made to the NEW Statute”)? Does this mean the Seller must “retroactively” execute the PCDS in this instance?

Common sense would dictate that there should be a “GRANDFATHERD IN” contractual time frame… to wit, “Any contracts fully executed before April 1, 2024 are not subject to the new statute”.

Also, NYS legislatures are known for “staying” newly enacted laws. Does this mean we could be on the receiving end of an “UPDATED NOTICE” that this “new revocation of Article 14” is NOT going into effect on March 20, 2024?

What will be the impact on Realtors if they (either intentionaly or inadvertently) do NOT procure this statement from their Seller… or fail to obtain “confirmation” from their Purchaser that the Purchaser ACTUALLY KNEW they had a right to recieve same PCDS?

Lastly: How will the Pleadings in the first litigation case in Civil Court read? How will the judge interpret the PCDS “answers” in conjunction with the “alleged damages” sustained by the Purchaser post closing? Will there eventually be a “Statute of Limitations” imposed… whereby…” any damages to the home must occur within ___ years of closing”…or will the Seller be PERPETUALLY liable for any damages sustained to the home from the “day of closing” as a result of the representations they made in the PCDS when they sold? Most paramount…will this new legislation dissuade Seller’s from selling?

The “hypothetical scenarios” are endless. As to how the “absolutes” will be contended with… remains to be seen.

 

 

DISCLAIMER: THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TO BE RELIED UPON AS LEGAL ADVICE. NO ATTORNEY CLIENT RELATIONSHIP IS CREATED BY THIS PUBLICATION. AN INDEPENDENT LEGAL OPINION SHOULD BE OBTAINED BY THE READER.