Property Condition Disclosure Statement – What to Know

As a homebuyer or seller in New York, it’s crucial to stay informed about the recent updates to the Property Condition Disclosure Statement (PCDS) that took effect on March 20, 2024. These changes aim to provide greater transparency and protection for all parties involved in residential real estate transactions.

The Elimination of the $500 Credit

One of the most significant changes is the removal of the $500 credit option for sellers who fail to provide the PCDS. Previously, sellers could choose to pay a $500 credit to the buyer at closing instead of completing the disclosure statement. However, it is now mandatory for sellers to complete and deliver the PCDS to potential buyers before signing a binding contract of sale.

Increased Focus on Flood Risk Disclosure

The updated PCDS now includes seven additional questions specifically related to flood hazards and risks. Sellers must disclose whether the property is located in a FEMA-designated 100-year or 500-year floodplain, whether flood insurance is required, and if any claims for flood damage or disaster assistance have been filed or received.

This heightened emphasis on flood risk disclosure is a direct response to the increasing frequency and severity of flooding events in recent years. By providing this information upfront, buyers can make more informed decisions and better assess the potential risks and costs associated with owning a property in a flood-prone area.

Liability for Willful Failure to Disclose

While the previous version of the PCDS held sellers liable for actual damages resulting from a willful failure to provide the disclosure statement, the updated law clarifies this liability. Sellers who willfully fail to provide the PCDS or provide inaccurate or incomplete information may be held liable for actual damages incurred by the buyer.

This change underscores the importance of truthful and comprehensive disclosure by sellers, as well as the potential legal consequences of failing to comply with the PCDS requirements.

Responsibilities of Real Estate Professionals

Real estate professionals, including listing agents and buyer’s agents, also have specific responsibilities under the updated PCDS law. Listing agents must inform sellers of their obligations to complete the PCDS, while buyer’s agents (or the seller’s agent if the buyer is unrepresented) must inform buyers of their rights to receive the disclosure statement.

Failure to fulfill these duties could potentially expose real estate professionals to liability, emphasizing the need for thorough understanding and compliance with the updated PCDS requirements.

Preparing for the Updated PCDS

As a homebuyer or seller in New York, it’s essential to be proactive and prepared for the updated PCDS process. Here are some tips to keep in mind:

1. Review the updated PCDS form: Familiarize yourself with the new questions, particularly those related to flood risks, to ensure you have the necessary information readily available.

2. Consult with professionals: If you’re a seller, consider consulting with a real estate attorney or professional inspector to ensure accurate and comprehensive disclosure of any known defects or issues with the property.

3. Allow sufficient time: Factor in additional time for completing and reviewing the PCDS, as the increased disclosure requirements may require more effort and attention to detail.

4. Understand your rights and obligations: Whether you’re a buyer or seller, make sure you fully understand your rights and obligations under the updated PCDS law to avoid potential legal issues or disputes.

By staying informed and proactive, both buyers and sellers can navigate the updated PCDS process with confidence, ensuring a smoother and more transparent real estate transaction in New York.

Before You Go!

Schedule Your Inspection Today!