Begin with Sect 18 00 Beginning Slide

(Begin with Sect 18 – 00 Beginning Slide)

WASHINGTON - SELLER'S DISCLOSURE FORM

Seller Disclosure Law - It is a part of a chapter in Title 64 of the RCWs;

Revised Code of Washington

1. Residential Property Only - The property disclosure statement law only applies to sellers of residential real property. When the seller of a residential dwelling puts their home up for sale, the seller must disclose the characteristics and problems associated with their home. This is done on the State's property disclosure statement form 17. Residential real estate includes the following:

2. Up to 4-Plex - Residential housing would include family living units from one to four dwelling units. Any owner of a 4-plex (4 residences) would have to abide by the property disclosure statement law. Single residence, duplex, triplex, and a 4-plex.

3. Condominium Requirements - Residential condominiums sold by the owner are not covered by the public offering statement requirement of the Washington Condominium Act. The seller does not have to offer a POS. The owner/seller does have to follow the property disclosure statement law instead.

Time-Shares Exempt - Residential time-shares are not covered by the written disclosure laws. The reason is because the time-share act is more stringent than the property disclosure statement law.

(On the next page put slides Sect 18 001 and 001A)

SELLER'S DISCLOSURE LAW - THOSE EXEMPT

The Property Disclosure Statement requirement does NOT have to be provided by the seller under the following circumstances:

1. Foreclosure - Property that is involved in any foreclosure proceedings is exempt from the disclosure law. This includes deeds-in-lieu of.

2. Gifts - A gift or other transfer to a parent, spouse, or child of the transferor/owner. Gifting is not considered to be a sale between individuals. Immediate relatives are thought to know the ramifications of properties among family members. Therefore, the WashingtonState law finds that the disclosure statement is not necessary.

3. Former Spouses - A transfer between spouses in connection with a marital dissolution. Transfers between former spouses are treated in the same manner as immediate family members. Therefore, the WashingtonState law finds that the disclosure statement is not necessary.

4. Former Owners - A transfer in which the buyer had an ownership interest within two years of the date of the transfer such as:

a. Partners - A partner in a partnership OR a limited partner in a limited partnership. Disclosure by the selling partnership is not necessary.

b. A 5% Shareholder - An investor who owns 5% or more of a real estate investment is considered an owner. The corporation does not have to fill out the seller disclosure statement to a 5% owner.

5. Tax Exchange Sale - Transfers to and from a facilitator pursuant to a tax deferred exchange. An exchange of real estate property for tax purposes can become fairly complicated. Also, most real estate exchanges are done for tax purposes and not for real estate ownership of a residence.

6. No Fee Simple - Transfer of less-than-fee simple interests - An example: A rent to buy contract. The vendee is not taking title to the property until later.

7. Estate Sale - A transfer by a personal representative in the settlement of an estate or the trustee of a bankruptcy. Just as delivering bargain and sale or quitclaim deeds in settling an estate is common, the State realizes that the representative of the decedent of an estate is unaware of the characteristics of the property and therefore, is not required to be legally responsible for a disclosure statement.

Review - The exempted transfers of ownership under the Seller's Property Disclosure Statement include ownership transfers of the following situations:

1. In foreclosure

2. Gifts to immediate family members

3. Divorce of owners

4. Purchase by a former owner within the past 2 years

5. Transfers that are not a fee simple estate

6. Estate sales

(On the next page put slides Sect 18 002 and 002A)

SELLER'S DISCLOSURE

SELLER RESPONSIBLE TO BUYER

1.Seller Completes Disclosure Form - The licensee can help the seller fill out the disclosure form, BUT the document is the seller's statement and must be signed by the seller.

2. Non-Exempt Transfer - If a sale, gift, or transfer is NOT one of the former exempt transfers, the Seller's Property Disclosure Statement Form shall be filled out by the seller UNLESS the buyer has expressly waived their right.

 Example:A buyer desires the home as soon as possible and the seller is overseas somewhere. If the buyer signs a document waiving his/her right to the form, the sale can proceed.

3. Not Part of the Sales Agreement - The disclosure form is not to be construed to be part of any written agreement between the buyer and seller. The form is:

a. Unilateral Statement - The form is only a disclosure statement by the seller - The buyer has no responsibilities. The buyer doesn't even have to read it if the buyer doesn't want to.

b. Seller's Statement - The form is not to be produced by the licensee involved. The form must be the seller's statement only.

c. Not a Warranty - The seller's statement is not a personal guarantee of any kind by the seller of the licensees involved in the transaction.

4. Lawful Requirement - As long as the seller discloses all the known "material" information about the property they are selling, the State law has been met. The seller is not responsible to repair any problems mentioned on the form. If there are UNKNOWN problems with the property, the seller in not responsible.

The Buyer - Once reading the disclosure form, the buyer can request repair, back out of the transaction, or accept the property as is.

(On the next page put slides Sect 18 003 and 003A)

DELIVERY OF DISCLOSURE STATEMENT TO BUYER

Seller Delivery RequirementsTime Period - Must be completed, signed, dated, and delivered within five (5) business days of mutual written agreement between the buyer and the seller UNLESS:

1. Buyer Waives - The form can be waived by buyer. This is done if the buyer is buying "AS IS".

2. Mutual Agreement - Another time frame was agreed to by the buyer and the seller.

Buyer Time Period - Once the form is delivered to the buyer, he/she has three (3) business days to read it. During this time period the buyer has the option of:

1. Approval - Approving and accepting the disclosure statement as is within 3 business day period.

...OR2. Rescind Offer - Rescinding the agreement in writing to the seller within the 3 business day period.

...OR3. Different Time Period - Both the seller and buyer established a different time period for approval. A time period as otherwise agreed to by both parties.

Rescission of the Offer by Buyer - The buyer must deliver a written rescission notice to the seller. Upon reading the form and issuing a written rescission of their offer to purchase:

1.Refund to Buyer - The buyer is entitled to an immediate return of all deposits and other considerations less any agreed disbursements paid to the seller.

2. Agreement Voided - The agreement for purchase and sale was voided by mutual assent; buyer and seller both agree to terminate the agreement.

No Response is Considered Acceptance - If there is no rescission notice within the three (3) business days time period, the disclosure statement will be deemed approved and accepted by the buyer.

(On the next page put slides Sect 18 004 and 004A)

SELLER DISCLOSURE - BUYER REQUESTS CORRECTIONS

Upon reading the Disclosure Form, the buyer may request additional changes to the property's condition prior to closing. If this is the case, the buyer is making a second offer.

1. Sellers Options - Upon reading the requested changes, the seller could:

a. No Corrections - Refuse to make corrections and wait for the buyer's response.

b. Make Corrections - Correct the problems to property that the buyer requested and amend the disclosure form within three (3) days of closing and deliver it. The buyer now enjoys the same guidelines as the original statement. The buyer has the same options with the amendment to the Form as with the original statement

2. Closing Date - The rescission period ends after the closing date. If the closing date is less than 3 business days away, the closing date shall be extended.

3. No Rescission Right - The buyer has no right of rescission if the reparations (corrections) are made to the property on time.

4. Finalized at Closing - If discrepancies in the disclosure statement arise after closing of the sales transaction the:

a. No Amendment Necessary - The seller has no obligation to amend the statement. The closing date terminates the seller's obligation of disclosure.

b. Buyer has No Right of Rescission - The closing of the transaction finalizes the disclosure statement law.

c. Civil Action - Though the disclosure law is finalized, civil action is not prevented by the buyer against the seller.

(On the next page put slides Sect 18 005 and 005A)

SELLER REFUSES TO MAKE REPAIRS

If the seller fails or refuses to provide a disclosure statement to the buyer as required by law:

Seller Does Not Disclose - If the seller does not send the buyer a Seller's Disclosure Statement, the following occur:

1. Closing - The buyer has right of rescission until the transfer of real property is closed and complete.

2. Waived - The seller has no rights if the buyer waived their right in writing and signed the waiver.

3. Non-cooperating Buyers or Sellers - The refusal and or failing to act on the form does not prevent sale.

Disclosure Error - Liability of the seller and/or licensee for errors on the Seller's Property Disclosure Statement such as inaccuracy or an omission, does not apply if:

Outside Services - The error came from information provided by public agencies or other persons providing information within the scope of their job or expertise.

 Example:A report provided by a land surveyor; a title company report; structural inspector; engineer; contractor, etc. If the information was provided by an outside source and incorrect, neither the seller nor the licensee can be held responsible. The buyer would have to take civil action against the person(s) who gave the information.

2. No Knowledge - The seller and licensee could be held responsible if either had knowledge of the professional inability and did not provided seller with disclosure. If the seller and licensee had no knowledge of the professional's mistake, they have no responsibility to the seller.

Continued Responsibility - Any amendment to a Seller's Property Disclosure Statement shall not extinguish any rights or remedies of the buyer against the seller or his/her agent concerning any other laws, statutes, or contracts. It only creates rights as outlined in this amendment within the time limits specified.

(On the next page put slides Sect 18 006 and 006)

SELLERS DISCLOSURES (CONTINUED)

FEDERAL LEAD PAINT REGULATIONS

Effective Date - October 28, 1995. Enforcement did not take effect until 1996. It became illegal to add lead to products in 1978 and so this law is aimed at paint that was in use prior to 1978.

1. Paint Prior to 1978 - The Federal government targeted residential property that was sold or leased and the residential property that was built before 1978. Since lead in paint was outlawed after 1978, it was felt that houses built after 1978 should be exempt.

2. Purpose - The purpose of the Federal Lead-Based Paint Hazard Reduction Act was to reduce the risk of lead poisoning by requiring disclosure of the potential lead-based paint danger, prior to 1978.

3. Requirements from the Seller or Lessor - This Federal Act placed requirements on the seller and the landlord/lessor regarding the transfer and/or use of a home built prior to 1978. The Act requires the following of either:

a. Present Pamphlet - To provide a buyer or lessee with an EPA lead hazard information pamphlet. This pamphlet explains the problem of lead based paint. It explains the serious problems that could ensue if lead is present in a person's everyday life.

b. Disclose Presence - To disclose to the buyer or the lessee (tenant) the presence of any "known" lead-based paint or known hazards.

c. Present Report - The owner/landlord must provide a lead hazard evaluation report for buyer and/or tenant.

d. 10 Day Inspection - The seller must allow the buyer a 10 day right of inspection for lead unless they both agreed otherwise. The right to conduct an inspection is guaranteed under the Act.

4. Leases Exempted - A landlord does not have to allow a 10 day period prior to a lease for inspection. Only the seller of property.

5. Warning to Buyer - Every contract for the purchase and sale of any interest in a residential property shall contain a lead warning statement in the agreement.

6. Buyer Requirements - The Act requires the lead-based statement to be signed by the purchaser/buyer acknowledging that the purchaser/buyer:

a. Has read and understood Lead Warning Statement.

b. Received the lead hazard pamphlet.

c. Was given the required 10 day (unless otherwise agreed to) opportunity to conduct risk assessment or inspection of the property. (On the next page put Sect 18 slides 007 and 007A)

LEAD_BASED PAINT - WARNING / DISCLOSURE

1. Lead Warning Statement - The lead-based warning statement must contain the following words in large type on a separate sheet of paper:

"Every purchaser of any interest in residential real property on which a residential dwelling was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The seller of any interest in residential real property is required to provide the buyer with any information on lead-based paint hazards from risk assessments or inspections in the seller's possession and notify the buyer of any known lead-based paint hazards. A risk assessment or inspection for possible lead-based paint hazards is recommended prior to purchase."

2. Real Estate Licensee - If a real estate agent/licensee is contracted on the sale, he/she is required to ensure compliance with this Federal law.

3. Penalties for Non-Performance

a. Civil Monetary Penalties - The buyer is allowed to sue the seller and/or licensee for injuries if not abiding by this Act.

b. Monetary Penalties - The violators (seller(s) and licensee(s) can be held jointly and severally liable up to 3 times the damages plus attorney fees and court costs. This is one of the few areas where instant punitive damages are allowed by law.

c. HUD - The Housing and Urban Development Agency (HUD) can take action against violators as well.

4. The Sales Contract - The violation of the Federal Lead-Based Paint Hazard Reduction Act does not affect the validity of contract. The sales contract is still valid.

No Defect on Title - If the buyer acquires title to the property with a violation of the Act on-going, the title will not have a cloud placed on it. The buyer shall gain title to property and all rights delegated by the deed.

(On the next page put Sect 18 slides 008 and 008A)

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