Dear New York Clients and Colleagues,
We want to bring to your attention some significant changes in the New York real estate law landscape that will affect both buyers and sellers, and it's important to be aware of these developments. On September 22, 2023, Governor Kathy Hochul signed crucial amendments to the Property Condition Disclosure Statement Act (PCDSA), which will become effective on March 20, 2024. This update brings substantial modifications to the existing law, and we believe it's vital for everyone involved in real estate transactions to understand these changes.
Removal of the $500 "Opt-Out" Credit: One of the most notable changes is the elimination of the provision that allowed sellers to opt-out of providing a completed Property Condition Disclosure Statement (PCDS) to buyers before entering into a contract. Under the previous law, if a seller didn't provide the PCDS, they were required to offer a $500 credit to the buyer at closing. This change is particularly significant in the downstate New York area, where most sellers opted for the credit instead of completing the PCDS.
Shift from "Remedy" to "Liability": Section 465 of the Real Property Law has been amended, changing its title from "Remedy" to "Liability." The language related to the $500 credit has been removed and replaced with a clause stating that the act does not limit any existing legal cause of action or remedy at law, in statute, or in equity. While this shift in terminology may not significantly affect a seller's potential liability, it's crucial to understand this change.
Additional PCDS Questions Related to Flood Issues: The PCDS now includes new questions specifically related to flood concerns. These questions address whether the property is located in a FEMA-designated floodplain, whether it's on a 100-year or 500-year floodplain, and if it's subject to federal flood insurance requirements. Sellers are also required to disclose any history of flood assistance and whether there has been water penetration or damage due to seepage or natural flood events. These additions provide buyers with more comprehensive information about flood-related risks.
Agent's Duty Under Section 466: While Section 466 of the Real Property Law remains unchanged, it's essential to understand the responsibilities of real estate agents regarding the PCDS. Agents representing sellers must inform sellers of their obligations under the PCDSA, while agents representing buyers or handling transactions involving a prospective buyer must educate buyers about their rights and obligations under the act.
Case Law Considerations: Previous court decisions have shaped the interpretation of the PCDSA. It's worth noting that a false statement in the PCDS may constitute active concealment, but buyers are required to prove that the seller had actual knowledge of the misrepresented condition. Understanding the nuances of case law can be crucial in navigating real estate transactions.
The newly amended PCDSA will bring changes to how real estate transactions are conducted in New York. Sellers will need to complete and deliver the new PCDS, and real estate agents should ensure compliance with Section 466. Attorneys will play a crucial role in advising their clients, and contract language may need refinement to protect sellers. Buyers must also be diligent in conducting necessary inspections, as the PCDS does not constitute a warranty.
As your dedicated real estate resource, we are committed to keeping you informed about these changes and guiding you through the evolving landscape of New York's real estate market. Please feel free to reach out with any questions or concerns you may have. Your peace of mind and confidence in your real estate transactions are our top priorities.
Sincerely,
The Westfield Team
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