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$500 Credit at Closing Eliminated
N.Y. Real Prop. Law § 462 requires that the seller of a one to four family dwelling must complete and sign a Property Condition Disclosure Statement and deliver it to the buyer prior to the buyer signing a binding contract of sale. A copy of the Property Condition Disclosure Statement with the signatures of the seller and buyer must be attached to the contract.
Under existing law, the seller can give the buyer a credit at closing of $500 in lieu of providing the Property Condition Disclosure Statement. This is the prevailing practice among most real estate attorneys. Effective March 20, 2024, the credit provision has been eliminated, and the seller of a one to four family dwelling must complete and sign a Property Condition Disclosure Statement and deliver it to the buyer prior to the buyer signing a binding contract of sale.
The real estate agents representing the seller and the buyer each have a statutory duty to timely inform their clients of the requirement to provide a Property Condition Disclosure Statement before the buyer signs a binding contract of sale. (N.Y. Real Prop. Law § 466.)
A Property Condition Disclosure Report is not required for the sale of a condominium unit or a cooperative apartment (N.Y. Real Prop. Law § 463), and the following transactions are exempt from the requirement to provide a Property Condition Disclosure Statement (N.Y. Real Prop. Law § 461 (5)):
- A transfer pursuant to a court order, including a foreclosure or bankruptcy sale;
- A transfer by a mortgagee which acquired the property at a foreclosure sale or by a deed in lieu of foreclosure;
- A transfer by a fiduciary in the course of the administration of a decedent’s estate, a guardianship, a conservatorship, or a trust;
- A transfer to or from the state, a political subdivision of the state, or another governmental entity; and
- A transfer that involves newly constructed residential real property that previously had not been inhabited.
A seller who fails to provide a Property Condition Disclosure Statement shall be liable for the actual damages suffered by the buyer, in addition to any other existing equitable or statutory remedy. (N.Y. Real Prop. Law § 465).
Also effective March 20, 2024, the Disclosure Statement will be amended to include disclosures regarding whether the property is located in a flood hazard area and whether flood insurance is required.
Click here to read the revisions to N.Y. Real Prop. Law § 462 effective March 20, 2024.
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