PROPOSED RULEMAKING
STATE REAL
ESTATE COMMISSION
[ 49 PA. CODE CH. 35 ]
Seller Property Disclosure Statement
[40 Pa.B. 2281]
[Saturday, May 1, 2010]The State Real Estate Commission (Commission) proposes to add §§ 35.284a and 35.335a (relating to disclosures required by the Real Estate Seller Disclosure Law; and seller's property disclosure statement) to read as set forth in Annex A.
A. Effective Date
The regulations will be effective upon publication of the final-form regulations in the Pennsylvania Bulletin.
B. Statutory Authority
The regulations are proposed under the authority of section 7304(a) of the Real Estate Seller Disclosure Law (SDL) (68 Pa.C.S. § 7304(a)), and sections 404 and 604(a)(15.1) of the Real Estate Licensing and Registration Act (RELRA) (63 P. S. §§ 455.404 and 455.604(a)(15.1)).
C. Background and Purpose
Section 604(a)(15.1) of the RELRA (63 P. S. § 455.604(a)(15.1)) makes failing to provide a disclosure required by another law in connection with a real estate transaction a disciplinary offense. The SDL, which replaced the repealed Real Estate Seller Disclosure Act (SDA) (68 P. S. §§ 1021—1036), establishes disclosure duties on real estate licensees and sellers for certain types of residential real estate transfers and delineates specific aspects of the property that must be disclosed by the seller to a prospective buyer.
Specifically, section 7313(c) of the SDL (68 Pa.C.S. § 7313(a)) requires seller's agents to advise sellers of their responsibilities under section 7303 of the SDL (68 Pa.C.S. § 7303) and provide sellers with a property disclosure statement. Under the SDL, sellers are required to: disclose any known material defects to the buyer before signing an agreement of transfer by completing a property disclosure statement that meets or exceeds the requirements of section 7304 of the SDL (68 Pa.C.S. § 7304), deliver the completed property disclosure statement to buyers or buyers agent under section 7305 of the SDL (68 Pa.C.S. § 7305), and notify buyers of any inaccuracies in accordance with section 7307 of the SDL (68 Pa.C.S. § 7307).
Under section 7304(a) of the SDL, the Commission is required to promulgate a property disclosure statement that satisfies the requirements of subsection (b). Until that time, under subsection (c), the statement contained in the SDA satisfies the requirements of the SDL.
Having reviewed the SDA property disclosure statement for 5 years and determining that it satisfactorily reflected the requirements of the SDL, the Commission attempted to promulgate a final-form regulation, with proposed rulemaking omitted under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240), known as the Commonwealth Documents Law (45 P. S. §§ 1201 and 1202), that included the SDA property disclosure statement and specific duties on licensees as set forth in the SDL. On May 26, 2006, the Commission submitted the proposed-omitted final form regulations to the Senate Consumer Protection and Professional Licensure Committee (SCP/PLC) and the House Professional Licensure Committee (HPLC) and the Independent Regulatory Review Commission (IRRC).
After extensive discussions with the HPLC, on June 7, 2006, the Commission tolled the review of the regulations under section 5.1(g)(1) of the Regulatory Review Act (71 P. S. § 745.5a(g)(1)), to allow it to make revisions to the text of the Annex recommended by the HPLC. Ultimately, after being requested by the HPLC to resubmit the regulations in proposed form, the Commission withdrew the regulations on June 13, 2006.
After that withdrawal, the Commission considered whether to further amend the previously submitted regulations and solicited comment from stakeholders. Following extended discussions at regularly scheduled meetings, the Commission voted to resubmit the regulations in proposed form. The proposed regulations are essentially the same disclosure form proposed in 2006. Two sections are rearranged to enhance clarity.
D. Description of Proposed Regulations
§ 35.284a—Disclosures required by the Real Estate Seller Disclosure Law.
Proposed subsection (a) tracks the duties on seller's agents under the SDL. Seller's agents must advise sellers of their duty to disclose known material defects with the property, provide sellers with a property disclosure statement that meets or exceeds the disclosures in proposed § 35.335a, and deliver either the completed property disclosure statement or one marked ''refused'' to buyers or buyers agent prior to the execution of an agreement of sale.
Proposed subsection (b) tracks the duties on buyer's agents under the SDL. Buyer's agents must advise buyers that sellers have the duty to disclose known material defects with the property, and deliver either the completed property disclosure statement or one marked ''refused'' to the buyer prior to the execution of an agreement of sale.
Proposed subsection (c) conforms to section 7310 of the SDL (68 Pa.C.S. § 7310) by requiring seller's agents and buyer's agents to disclose, to the buyer in writing, material defects that the seller did not disclose and of which the licensee has actual knowledge. New subsection (d) provides that neither seller's agents nor buyer's agents are required to conduct an independent investigation to confirm seller's disclosures on the property disclosure statement.
While the SDL does not specifically state that seller may refuse to complete a property disclosure statement, section 7311 of the SDL (68 Pa.C.S. § 7311) addresses the penalty on a seller for failing to comply with the SDL. Because, in the Commission's experience it is aware that some sellers refuse to complete the property disclosure statement, and because section 7311 specifically states that a residential real estate transaction will not be invalidated solely because of a failure to comply with the SDL, the Commission added refusal language to both subsections (a) and (b) to provide guidance to licensees.
§ 35.335—Seller's property disclosure statement.
Proposed § 35.335a sets forth the Commission's property disclosure statement. Its language is identical to the property disclosure statement previously set forth in the SDA. The Commission believes that this property disclosure statement meets the requirements of section 7304(b) of the SDL. Further, because section 7304(a) permits sellers to provide a disclosure statement that exceeds the requirements of section 7304(b), and in the Commission's experience, licensees generally provided a more comprehensive disclosure, the language previously set forth in the SDA suffices as a minimum requirement.
E. Compliance with Executive Order 1996-1
In compliance with Executive Order 1996-1, the Commission extended an invitation to the following boards, associations, real estate education providers and licensees to preliminarily review and comment on the Commission's draft regulatory proposal: Pennsylvania Association of Realtors, Realtors Educational Institute, Institute of Real Estate Studies, Polley Associates, Pennsylvania Cemetery & Funeral Association, Pennsylvania Bar Association, Allegheny Highland Association, Greater Allegheny-Kiski Area Board, Allegheny Valley Board, Beaver County Association, Bradford-Sullivan County Association, Bucks County Board, Butler County Association, Cambria-Somerset Association, Carbon County Association, Carlisle Association, Central Montgomery County Association, Central Susquehanna Valley Board, Central Westmoreland Board, Centre County Association, Chester County Association, Clearfield-Jefferson Association, Delaware Valley Realtors Association, East Montgomery County Association, Elk-Cameron County Board, Greater Erie Board, Fayette County Board, Franklin County Association, Greenville Area Board, Hanover-Adams County Association, Greater Harrisburg Association, Greater Hazleton Association, Huntingdon County Board, Indiana County Board, Lancaster County Association, Lawrence County Board, Lebanon County Association, Lehigh Valley Association, McKean County Association, Greater Meadville Board, Greater Mercer County Board, Mifflin-Juniata County Board, Mon Yough Association, Monongahela Valley Board, Greater Philadelphia Association, North Central Penn Board, Pike/Wayne Association, Pocono Mountains Association, Reading-Berks Association, Realtors Association of Metropolitan Pittsburgh, Schuylkill County Board, Greater Scranton Association, Tri-State Commercial and Industrial Association, Warren County Board, Washington-Greene Association, West Branch Valley Association, Westmoreland West Association, Greater Wilkes-Barre Association, York County Association, the Pennsylvania Federation of Housing Counselors and Agencies, and the Real Estate Consumer Council. The Commission considered comments submitted to it in drafting the proposal.
F. Fiscal Impact and Paperwork Requirements
The regulations should have no fiscal impact on, or create additional paperwork for, the regulated community or the political subdivisions of this Commonwealth. Real estate licensees have been providing property disclosure statements to sellers and buyers of applicable residential real estate since the enactment of the SDA. This proposal does not alter that requirement.
G. Sunset Date
The Commission reviews the effectiveness of its regulations on an ongoing basis. Therefore, no sunset date has been assigned.
H. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 21, 2010, the Commission submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to IRRC and to the HPLC and the SCP/PLC. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections must specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Commission, the General Assembly and the Governor of comments, recommendations or objections raised.
I. Public Comment
Interested persons are invited to submit written comments, recommendations or objections regarding the proposed regulations to Judith Pachter Schulder, Counsel,State Real Estate Commission, P. O. Box 2649, Harrisburg, PA 17105-2649 or jschulder@state.pa.us within 30 days of publication of this proposed rulemaking. Reference No. 16A-5618 (Seller Property Disclosure Statement), when submitting comments.
JOSEPH TARANTINO, Jr.,
ChairpersonFiscal Note: 16A-5618. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 49. PROFESSIONAL AND VOCATIONAL STANDARDS
PART I. DEPARTMENT OF STATE
Subpart A. PROFESSIONAL AND OCCUPATIONAL AFFAIRS
CHAPTER 35. STATE REAL ESTATE COMMISSION
Subchapter E. STANDARDS OF CONDUCT AND PRACTICE
GENERAL ETHICAL RESPONSIBILITIES § 35.284a. Disclosures required by the Real Estate Seller Disclosure Law.
(a) Seller's agents shall:
(1) Advise sellers of their duty to disclose any known material defects with the property by completing a property disclosure statement that satisfies the requirements in 68 Pa.C.S.A. § 7304 (relating to disclosure form).
(2) Provide sellers with a property disclosure statement that meets or exceeds the disclosures set forth in § 35.335a (relating to seller property disclosure statement).
(3) Deliver the completed property disclosure statement or the property disclosure statement marked ''refused'' to the buyer or buyer's agent prior to the execution of an agreement of sale.
(b) Buyer's agents shall:
(1) Advise buyers that sellers have a duty to provide a completed property disclosure statement.
(2) Deliver the completed property disclosure statement or the property disclosure statement marked ''refused'' to the buyer prior to the execution of an agreement of sale.
(c) Both seller's agents and buyer's agents (licensees) are required to disclose, to the buyer in writing, all material defects that are not otherwise disclosed and of which the licensee has actual knowledge.
(d) Neither seller's agents nor buyer's agents are required to conduct an independent investigation to confirm seller's disclosures on the property disclosure statement.
REAL ESTATE DOCUMENTS § 35.335a. Seller property disclosure statement.
The seller's property disclosure statement must, at a minimum, contain the following disclosures:
Seller's Property Disclosure Statement Property address: __________Seller: __________A seller must disclose to a buyer all known material defects about property being sold that are not readily observable. This disclosure statement is de-signed to assist the seller in complying with disclosure requirements and to assist the buyer in evaluating the property being considered.This statement discloses the seller's knowledge of the condition of the property as of the date signed by the seller and is not a substitute for any inspections or warranties that the buyer may wish to obtain. This statement is not a warranty of any kind by the seller or a warranty or representation by any listing real estate broker, any selling real estate broker or their agents. The buyer is encouraged to address concerns about the condition of the property that may not be included in this statement. This statement does not relieve the seller of the obligation to disclose a material defect that may not be addressed on this form.A material defect is a problem with the property or any portion of it that would have a significant adverse impact on the value of the residential real property or that involves an unreasonable risk to people on the land. The fact that a structural element, system or subsystem is near, at or beyond the end of its normal useful life is not by itself a material defect.(1) Seller's expertise. The seller does not possess expertise in contracting, engineering, architecture or other areas related to the construction and condition of the property and its improvements, except as follows: __________(2) Occupancy. Do you, the seller, currently occupy this property? ____ yes ____ noIf ''no,'' when did you last occupy the property? __________(3) Roof.(i) Date roof was installed: __________
Documented? ____ yes ____ no ____ unknown(ii) Has the roof been replaced or repaired during your ownership? ____ yes ____ noIf ''yes,'' were the existing shingles removed?____ yes ____ no ____ unknown(iii) Has the roof ever leaked during your owner-ship?____ yes ____ no(iv) Do you know of any problems with the roof, gutters or downspouts? ____ yes ____ noExplain any ''yes'' answers that you give in this section: _____________________________________________________________(4) Basements and crawl spaces (Complete only if applicable).(i) Does the property have a sump pump?____ yes____ no ____ unknown(ii) Are you aware of any water leakage, accumulation or dampness within the basement or crawl space? ____ yes ____ noIf ''yes,'' describe in detail: ____________________________________________(iii) Do you know of any repairs or other attempts to control any water or dampness problem in the basement or crawl space? ____ yes ____ noIf ''yes,'' describe the location, extent, date and name of the person who did the repair or control effort: ___________________________(5) Termites/wood destroying insects, dry rot, pests.(i) Are you aware of any termites/wood destroying insects, dry rot or pests affecting the property? ____ yes ____ no(ii) Are you aware of any damage to the property caused by termites/wood destroying insects, dry rot or pests? ____ yes ____ no(iii) Is your property currently under contract by a licensed pest control company? ____ yes ____ no(iv) Are you aware of any termite/pest control reports or treatments for the property in the last 5 years? ____ yes ____ noExplain any ''yes'' answers that you give in this section: ____________________________________________(6) Structural items.(i) Are you aware of any past or present water leakage in the house or other structures? ____ yes ____ no(ii) Are you aware of any past or present movement, shifting, deterioration or other problems with walls, foundations or other structural components?____ yes ____ no(iii) Are you aware of any past or present problems with driveways, walkways, patios or retaining walls on the property? ____ yes ____ noExplain any ''yes'' answers that you give in this section: ____________________________________________When explaining efforts to control or repair, please describe the location and extent of the problem and the date and person by whom the work was done, if known: ____________________________________________(7) Additions/remodeling. Have you made any additions, structural changes or other alterations to the property? ____ yes ____ noIf ''yes,'' please describe: ___________________________(8) Water and sewage.(i) What is the source of your drinking water?____ public ____ community system
____ well on property ____ otherIf ''other,'' please explain: ____________________________________________(ii) If your drinking water source is not public:When was your water last tested? __________What was the result of the test? __________Is the pumping system in working order?
____ yes ____ no
If ''no,'' please explain: ___________________________(iii) Do you have a softener, filter or other purification system?____ yes ____ noIf ''yes,'' is the system: ____ leased ____ owned(iv) What is the type of sewage system?
____ public sewer ____ private sewer____ septic tank____ cesspool ____ otherIf ''other,'' please explain: ___________________________(v) Is there a sewage pump? ____ yes ____ noIf ''yes,'' is it in working order? ____ yes ____ no(vi) If applicable, when was the septic system or cesspool last serviced? ___________________________(vii) Is either the water or sewage system shared? ____ yes ____ no
If ''yes,'' please explain: ___________________________(viii) Are you aware of any leaks, backups or other problems relating to any of the plumbing, water and sewage-related items? ____ yes ____ noIf ''yes,'' please explain: ___________________________(9) Plumbing system.(i) Type of plumbing: ____copper ____ galvanized
____ lead ____ PVC ____ unknown ____ other
If ''other,'' please explain: ____________________________________________(ii) Are you aware of any problems with any of your plumbing fixtures (including, but not limited to: kitchen, laundry or bathroom fixtures, wet bars, hot water heater, etc.)? ____ yes ____ noIf ''yes,'' please explain: ____________________________________________(10) Heating and air conditioning.(i) Type of air conditioning: ____ central electric
____ central gas ____ wall ____ none(ii) List any areas of the house that are not air conditioned: ___________________________(iii) Type of heating: ____ electric ____ fuel oil
____ natural gas ____ otherIf ''other,'' please explain: ____________________________________________(iv) List any areas of the house that are not heated: ___________________________(v) Type of water heating: ____ electric ____ gas
____ solar ____ otherIf ''other,'' please explain: ____________________________________________(vi) Are you aware of any underground fuel tanks on the property? ____ yes ____ noIf ''yes,'' please describe: ____________________________________________Are you aware of any problems with any item in this section? ____ yes ____ noIf ''yes,'' please explain: ____________________________________________(11) Electrical system. Are you aware of any problems or repairs needed in the electrical system?
____ yes ____ noIf ''yes,'' please explain: ____________________________________________(12) Equipment and appliances.The following items included in the sale are in need of repair or replacement: ____________________________________________(13) Land (soils, drainage and boundaries).(i) Are you aware of any fill or expansive soil on the property? ____ yes ____ no(ii) Are you aware of any sliding, settling, earth movement, upheaval, subsidence or earth stability problems that have occurred on or that affect the property? ____ yes ____ noNOTE TO BUYER: Some properties may be subject to mine subsidence damage. Maps of the counties and mines where mine subsidence damage may occur and mine subsidence insurance are available through:Department of Environmental Protection
Mine Subsidence Insurance Fund
25 Technology Drive, California Technology Park
Coal Center, PA 15413
(in PA) (800) 922-1678
(outside PA) (724) 769-1100(iii) Are you aware of any existing or proposed mining, strip mining or any other excavations that might affect this property? ____ yes ____ no(iv) To your knowledge, is this property or part of it located in a flood zone or wetlands area? ____ yes ____ no(v) Do you know of any past or present drainage or flooding problems affecting the property? ____ yes ____ no(vi) Do you know of any encroachments, boundary line disputes or easements? ____ yes ____ noNOTE TO BUYER: Most properties have easements running across them for utility services and other reasons. In many cases, the easements do not restrict the ordinary use of the property, and the seller may not be readily aware of them. Buyers may wish to determine the existence of easements and restrictions by examining the property and ordering an abstract of title or searching the records in the Office of the Recorder of Deeds for the county before entering into an agreement of sale.(vii) Are you aware of any shared or common areas (for example, driveways, bridges, docks, walls, etc.) or maintenance agreements? ____ yes ____ noExplain any ''yes'' answers that you give in this section: ____________________________________________(14) Hazardous substances.(i) Are you aware of any underground tanks or hazardous substances present on the property (structure or soil), including, but not limited to, asbestos, polychlorinated byphenyls (PCBs), radon, lead paint, urea-formaldehyde foam insulation (UFFI), etc.? ____ yes ____ no(ii) To your knowledge, has the property been tested for any hazardous substances? ____ yes ____ no(iii) Do you know of any other environmental concerns that might impact upon the property? ____ yes ____ noExplain any ''yes'' answers that you give in this section: ____________________________________________(15) Condominiums and other homeowners associations (complete only if applicable).Type: ____ condominium* ____ cooperative ____ homeowners association ____ otherIf ''other,'' please explain: ____________________________________________
NOTICE REGARDING
CONDOMINIUMS AND COOPERATIVES:According to section 3407 of the Uniform Condominium Act (68 Pa.C.S. § 3407) (relating to resales of units) and 68 Pa.C.S. § 4409 (relating to resales of cooperative interests), a buyer of a resale unit in a condominium or cooperative must receive a certificate of resale issued by the association in the condominium or cooperative. The buyer will have the option of canceling the agreement with return of all deposit moneys until the certificate has been provided to the buyer and for 5 days thereafter or until conveyance, whichever occurs first.(16) Miscellaneous.(i) Are you aware of any existing or threatened legal action affecting the property? ______ yes ______ no(ii) Do you know of any violations of Federal, State or local laws or regulations relating to this property? ____ yes ____ no(iii) Are you aware of any public improvement, condominium or homeowner association assessments against the property that remain unpaid or of any violations of zoning, housing, building safety or fire ordinances that remain uncorrected?______ yes______ no(iv) Are you aware of any judgment, encumbrance, lien (for example, comaker or equity loan) or other debt against this property that cannot be satisfied by the proceeds of this sale? ____ yes ____ no(v) Are you aware of any reason, including a defect in title, that would prevent you from giving a warranty deed or conveying title to the property? ____ yes ____ no(vi) Are you aware of any material defects to the property, dwelling or fixtures which are not disclosed elsewhere on this form? ____ yes ____ noA material defect is a problem with the property or any portion of it that would have a significantadverse impact on the value of the residential real property or that involves an unreasonable risk to people on the land.Explain any ''yes'' answers that you give in this section: ____________________________________________The undersigned seller represents that the information set forth in this disclosure statement is accurate and complete to the best of the seller's knowledge. The seller hereby authorizes any agent for the seller to provide this information to prospective buyers of the property and to other real estate agents. The seller alone is responsible for the accuracy of the information contained in this statement. The seller shall cause the buyer to be notified in writing of any information supplied on this form that is rendered inaccurate by a change in the condition of the property following the completion of this form.
SELLER______ DATE______ SELLER______ DATE______ SELLER______ DATE______
EXECUTOR, ADMINISTRATOR, TRUSTEE The undersigned has never occupied the property and lacks the personal knowledge necessary to complete this disclosure statement.__________DATE__________
RECEIPT AND ACKNOWLEDGMENT BY BUYER The undersigned buyer acknowledges receipt of this disclosure statement. The buyer acknowledges that this statement is not a warranty and that, unless stated otherwise in the sales contract, the buyer is purchasing this property in its present condition. It is the buyer's responsibility to satisfy himself or herself as to the condition of the property. The buyer may request that the property be inspected, at the buyer's expense and by qualified professionals, to determine the condition of the structure or its components.
BUYER______ DATE______ BUYER______ DATE______ BUYER______ DATE______
[Pa.B. Doc. No. 10-774. Filed for public inspection April 30, 2010, 9:00 a.m.]
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