What New York Sellers Must Disclose – and What They Don’t Have To

New York’s disclosure framework for residential real estate creates specific, legally enforceable obligations for sellers. Getting this right matters – failure to disclose known material defects exposes sellers to post-closing legal liability, even in otherwise properly executed transactions.

The Property Condition Disclosure Statement

New York State requires sellers of residential real property to provide buyers with a Property Condition Disclosure Statement (PCDS) – a standardized form that asks sellers to disclose known material defects across a comprehensive list of property systems and conditions.

The PCDS covers: the condition of the roof, foundation, and structure; water supply and sewage systems; heating and cooling systems; electrical system; presence of hazardous materials (lead, asbestos, radon, underground storage tanks); environmental conditions; flood zone status; known zoning or code violations; and several other categories.

Sellers answer each question based on their actual knowledge. The keyword is known – you are not required to conduct an investigation to uncover conditions you were unaware of. But conditions you do know about must be disclosed honestly.

The Penalty Election

New York law gives sellers an unusual option: rather than completing the PCDS, sellers may elect to pay the buyer a $500 credit at closing and decline to complete the statement. Some sellers choose this option because they have limited knowledge of the property’s history (estate sales, for example) or because they prefer to avoid the liability that comes with making specific representations.

Buyers who receive the $500 credit in lieu of a PCDS should understand that they are receiving less information about the property’s known condition, and should place additional weight on a thorough home inspection.

What You Are Required to Disclose Beyond the PCDS

New York common law requires disclosure of known material defects that are not apparent to a reasonable buyer conducting an ordinary inspection. The legal principle is that sellers cannot actively conceal known problems or remain silent when silence would constitute fraud.

Material defects that fall outside the PCDS categories – or that would not be apparent to a buyer or their inspector – need to be disclosed even if the PCDS doesn’t specifically ask about them.

What Sellers Are Not Required to Disclose

New York law specifically exempts sellers from disclosing psychological stigma – the fact that a death occurred in the property, that the property was the site of a crime, or other non-physical conditions that might affect buyer perception but don’t relate to the physical condition of the property.

Sellers are also not required to disclose facts they don’t know. A latent defect – one that is hidden and could not reasonably have been discovered – is not a disclosure obligation for a seller who was genuinely unaware of it.

The Practical Advice

When in doubt, disclose. The legal exposure from failing to disclose a known material defect – which can include post-closing rescission of the sale, damages, and legal fees – is far more costly than the negotiation impact of disclosing the issue upfront and pricing or crediting accordingly.

I help sellers complete disclosure documents accurately and completely, and advise on how known conditions should be addressed before or during the listing process. Call me at (321) 447-4259 or visit movewithricky.com.

—

Rakesh (Ricky) Khanna | Licensed Real Estate Salesperson
Better Homes and Gardens Real Estate Realty Connect
Call or text: (321) 447-4259 | movewithricky.com