Fair Disclosure and Airport Impact Statements in Real Estate Transfers (2012) / Chapter Skim
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Pages 30-41
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From page 30... ...
I SELLER'S DUTY TO DISCLOSE PROPERTY DEFECTS OR OFF-SITE CONDITIONS According to the National Association of Realtors, approximately two-thirds of the states have enacted residential real property disclosure laws.262 A survey of state statutes conducted for this report reveals that, although the statutes vary, at least 36 states have laws requiring a seller to disclose to a buyer defects in or conditions affecting residential real property that is offered for sale.263 In those states without a disclosure act, a seller's obligation or duty to disclose defects of conditions affecting property likely is limited by the rule of caveat emptor, a doctrine of "long standing" in the United States.264 As explained by an Ohio court, [t]
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From page 31... ...
. The Alfaro court noted that there is now a statutory duty in California to disclose deed restrictions in a real estate transfer disclosure statement.
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Timing, Proof of Delivery, Amendments, and Waiver of Disclosure Statements B.1. Time of Disclosure Many disclosure laws require that sometime before or at the time of a buyer's offer to purchase residential real property, or before or at the time of the execution of a real estate contact, a seller must deliver to a buyer in person or by mail a written disclosure statement, the form of which may be prescribed by the statute.282 Another example of timing is to require that a disclosure must be made prior to the time of transfer of the title to the real property.
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From page 33... ...
Although the states' approaches vary, the disclosure laws ordinarily require that a disclosure statement be signed, that the signed real estate contact include the disclosure statement as an addendum, or that a buyer sign a receipt for the delivery of a disclosure statement.283 For example, in Delaware a seller or a seller's agent must give a copy of the disclosure form "to all prospective buyers or prospective buyer's agent prior to the time the buyer makes an offer to purchase," and the disclosure form signed by the buyer and seller must "become a part of the purchase agreement."284 However, unlike Delaware's statute, very few of the disclosure laws require that a disclosure statement must be made a part of the parties' real estate contract; in fact, some states provide that a "statement is for disclosure only and is not intended to be a part of any contract between the purchaser and the seller."285 B.3. Amendments to a Disclosure Statement A disclosure statement may become inaccurate after its initial delivery to a buyer, or there may be a material change affecting the property after the statement's delivery.286 Some disclosure laws require that after a seller delivers a disclosure statement and prior to an executed contract or a transfer of the property by deed a seller must amend a disclosure statement that fails to include required information or that has become inaccurate.287 B.4.
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the better practice is to attach the disclosure statement to the sales contract and include an anti-merger clause in the contract so that the contract and disclosure statement are not merged in a deed of conveyance.294 C.3. Seller's Good Faith or Honesty in Fact Some disclosure laws require sellers to act in good faith when disclosing property defects and conditions affecting a property offered for sale.
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From page 35... ...
Transfers Exempt from Disclosure Requirement Current disclosure laws commonly exempt from as few as four to as many as 12 specific types of transfers of residential real estate. One fairly common exemption is for a first sale of residential property that has never been occupied or inhabited.298 Although such an exemption may be justified for defects in new dwellings that may be under warranty, it is questionable whether such an exemption is appropriate in an airport disclosure act.
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From page 36... ...
existence of hazardous waste facilities."317 In some states, local governments are authorized to decide whether to require the disclosure of conditions affecting residential real property, as in Michigan.318 However, in Pennsylvania, a municipality or local authority does not have the power to mandate that a seller make "any particular d isclosures" to a buyer regarding a residential real estate transfer319 or require that "provisions on any particular subject be included in an agreement of transfer."320 Although an airport safety zone and an airport must be disclosed as off-site conditions under two New Jersey acts, as set forth in Section II of this report, no disclosure laws in other states, as well as cases, were located that specifically require the disclosure of an airport as an off-site condition.
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Effect of Nondisclosure on a Transfer of Real Property Current disclosure laws typically provide that a transfer of real property that was made without a seller's compliance with a disclosure requirement is not void or invalidated323 or does not create any defect in title.324 H Buyer's Remedies for a Seller's Violation of a Disclosure Act H.1.
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n action for actual damages suffered as a result of defects existing in the property as of the date of execution of the real estate purchase contract."331 However, a seller must have "actually presented" a required disclosure statement, and the buyer must not have been aware of an undisclosed defect.332 A buyer's second remedy is when there has been a misrepresentation in a disclosure statement: the buyer may terminate the contract, but the termination must occur prior to the closing.333 Finally, a buyer may rely on any other remedies available at law or in equity against a seller for his or her intentional or willful misrepresentation of the condition of the property.334 A related issue that should be addressed in an airport disclosure act is whether a buyer's other remedies are pre-empted. Several disclosure laws do not affect other disclosures required by law or affect other remedies that may be available to a buyer.335 Minnesota's disclosure law does not preclude a seller's liability for fraud, negligent misrepresentation, or other actions.336 In contrast, Oklahoma's disclosure act "supplants and abrogates all common law liability, rights, duties, obligations and remedies therefor."337 H.4.
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77/60 (2010) ("No action for violation of this Act may be commenced later than one year from the earlier of the date of possession, date of occupancy, or date of recording of an instrument of conveyance of the residential real property.")
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Covenant Running with the Land If it is unclear whether a collateral agreement or declaration survives the delivery of a deed, then a court would be required to determine what the parties intended to be incorporated in the deed or what was not necessarily performed or satisfied by the deed.368 For the protection of a buyer or other transferee, as well as to avoid the merger-by-deed rule, an airport disclosure act should require that a disclosure state 355 Erlewine v.
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v. Fellton,373 the court held that an agreement containing certain restrictive covenants that was recorded by a grantor of property as part of the deed of conveyance was binding on Toyota as a successor in title to the property.374 A second agreement was recorded independently that was not referenced in the deed of conveyance; nevertheless, "Toyota had constructive knowledge of [the agreement]
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