Seller Property Disclosure

As I had predicted and/or hoped, Thursday’s contract writing class led to a bit of blog fodder, though not in the form of interesting questions that arose. This likely will bore the hell out of the non-Realtor sect of readers so I invite the two of you to talk amongst yourselves.

Here was the paragraph in dispute:

4e. Changes During Escrow: Seller shall immediately notify Buyer of any changes in the Premises or disclosures made herein, in the SPDS [ed note: Sellers Property Disclosure Statement], or otherwise. Such notice shall be considered an update of the SPDS. Unless seller is already obligated by Section 5a, or otherwise by this Contract or any amendments hereto, to correct or repair the changed item disclosed, Buyer shall be allowed five (5) days after delivery of such notice to provide notice of disapproval to Seller.

Section 5a, incidentally, covers the seller warranteed items – plumbing, electrical, etc.

The debate centers around whether a seller has to disclose a change in a warranteed item or if the above paragraph negates that requirement. In other words, if there’s a plumbing leak that the seller fixes, do they have to disclose it?

I argue they absolutely should. The SPDS has the following question: “Are you aware of any past or present plumbing problems?” If I’m supposed to disclose a leaky pipe from five years ago, why shouldn’t I have to disclose a leaky pipe from five days ago?

My contention is the second sentence says only that a buyer has five days to disapprove (read: cancel the contract) if there’s a change in the condition of the property that is not required to be repaired by the seller. Others have read the same sentence to say that the seller doesn’t have to close what they’re required to fix.

Both sides agree the buyer does not have the option to cancel if there’s a change in the condition of a warranteed item (unless the seller doesn’t correct the issue by the time of the final walkthrough, at which point a cure notice can be issued.)

What say you, my readers? And if you’re a would-be Realtor who has stumbled onto this post, welcome to your future. Debates such as these are among the things they don’t warn you about when you are in real estate school.

UPDATE: If you’re reading this post in 2017, please note that the contract was updated again in the past few months and not all the boilerplate is the same.

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.

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