Property Condition Disclosure Act (As Amended) (REDUX!!!)………..

Assembly Bill A. 1967, together with Senate Bill S. 5400, were both presented to Governor Elizabeth Hochul for consideration as Chapter 484 on September 22, 2023, which she then signed into Law. This new Legislation effectively abolishes the Property Condition Disclosure Act which afforded a Seller of Residential Real Estate (as defined therein) the option to elect to not complete the Property Condition Disclosure Statement, and in lieu thereof, give to the Purchaser a sum certain credit of $500.00 for failing to complete the Disclosure Form. The effective date of this Legislation is March 20, 2024. With that, this disposes of the Seller’s option to provide the $500.00 credit and makes mandatory a Seller’s obligation to complete the Disclosure Form. Further compounding the issue of disclosure, is that the Real Property Law was amended to require a Seller of Residential Real Property to disclose indoor mold history, effective June 14, 2023, while a Second Amendment was signed by the Governor on September 22, 2023, with the effective date of March 20, 2024, which now requires the disclosure by a Seller as to whether or not the Residential Real Property is in a FEMA flood zone.

Now that simply reports the news.  So now let’s consider the consequences of this new Legislation. A Real Estate Broker provides the newly modified Property Condition Disclosure Form to their Seller and advises their Seller to meet with their Attorney who will assist them in properly completing the Disclosure Form. Good news? No, bad news.  And why? What special knowledge and/or expertise does an Attorney possess that will allow for the Attorney to assist a Seller in properly completing the new Property Condition Disclosure Statement as to matters pertaining to a particular Seller's Residential Real Property? None that I can think of.  In fact, most Attorneys who I know of, myself included, can barely screw in a light bulb.

On another point that I had addressed in the past.  May the Property Condition Disclosure Act be waived? I believe that it may be waived, by virtue of the silence of the Legislature.  Many other Statutes designed to protect the public contain non-waiver provisions. For example, I refer one to the “Used Car Lemon Law” General Business Law Section 198-b, and many others. Accordingly, by virtue of the silence of the Legislature as it pertains to the Property Disclosure Act, I am of the opinion that the PCDA may be waived, as the Legislature had every right and opportunity to include a non-waiver provision in the Legislation for the protection of the public, if it chose to do so.  And it did not.

And by examination of the Property Condition Disclosure Statement, drawing one’s attention to one provision, for example.  Question 9 reads: “Are there Certificates of Occupancy related to the Property?” A Seller looks through his documents from when he or she purchased the Residential Real Estate in 1980 and locates a Certificate of Occupancy for the Property dated 1960.  So his or her instinctive reaction is to respond “Yes, there is a Certificate of Occupancy for the Property.”  Lo and behold, there were, in fact, a number of modifications to the Property that were made without Department of Buildings approvals.

Drawing an analogy to the Multiple Dwelling Law Sections 301 and 302, which address rent forfeitures for multiple dwellings that lack a Certificate of Occupancy, whereby the remedy is that a Landlord risks forfeiting his or her right to collect rent. The question then becomes is a Building which has a Certificate of Occupancy, but the present use does not conform to the Certificate of Occupancy, is that the equivalent of the Building as NOT having a Certificate of Occupancy? While there is no Appellate Authority as to this issue, Lower New York Courts have had divergent opinions. Some Courts have held that “when a violation exists for Occupancy that is at odds with the Certificate of Occupancy, the Building, essentially, LACKS a Certificate of Occupancy.” 936 TYH RM Bronx LLC v. Brujan, 2022 NY Misc LEXIS 10682 (Civ. Ct., Bx. Cty. 2022). So what does that mean? It means that if a Purchaser, either pre-closing, or perhaps post-closing, is looking for a reason to either terminate the Real Estate Transaction, or rescind the transaction, post-closing, he or she may hang his hat on his or her discovery that the current use of the Residential Real Estate, as existing, does not fully conform to the existing Certificate of Occupancy. Accordingly, on the basis of that provision alone, a Purchaser may possibly be able to fully void the Residential Real Estate transaction, even after it closed! So the question is posed to the Seller: “Who advised you to answer ‘yes’ as to whether there is a Certificate of Occupancy for the Residential Real Estate?” Answer: My Attorney did, of course!!!!!! Ouch!!

So when the Broker advises the Seller to contact their Attorney to assist them in properly completing the new Disclosure Form, and the Attorney responds and asserts “what do I know about your house, this ain’t my thing”, no doubt, the Seller will think that the Attorney just doesn’t want to be bothered, which in reality, by not assisting in the regard, is the Attorney properly “staying in his or her lane”, although, guaranteed, it won’t be looked at that way.  Another landmine waiting to explode.