NY Property Condition Disclosure Statement Changes

Effective March 20, 2024

On September 22, 2023, the Governor signed into law A01967/S05400, which amends Article 14 of the Real Property Law as it relates to the Property Condition Disclosure Act. The changes go into effect March 20, 2024. See, A01967/S05400.

Since 2002, the law has required the seller to deliver to the purchaser a Property Condition Disclosure Statement disclosing certain known property conditions affecting 1-4 family homes prior to contract, or in the alternative, provide the purchaser a $500 credit at closing if the statement is not provided. Due to liability concerns, it has become customary in certain markets to provide a credit.

The recent legislation contains two significant changes practitioners must be aware of:

Liability/Seller Remedies

As of March 20, 2024, the $500 credit set forth in current Section 465(1) will no longer be an option for sellers in lieu of providing the Property Condition Disclosure Statement. Instead, Real Property Law Section 467 is revoked and the language contained therein regarding the liability of the seller under this section of the law was relocated by amending and renaming Real Property Law Section 465 from “Remedy” to “Liability.” The renaming and amendment revoke the $500 credit option set forth in Section 465(1) and replace same with the following language: “nothing contained in this Article shall be construed as limiting any existing legal cause of action or remedy at law, in statute or in equity” See, Real Property Law Section 465 [Effective March 20, 2024]

A review of the legislation and commentary indicates that the intent of this amendment is to require sellers to provide the disclosure statement or run the risk of being held liable, in law or equity, for failing to do so. Since no defined or fixed remedies exist in the statute, the number and type of claims available to a buyer against a seller are uncertain.

Newly Added Questions Regarding Flood Zones

As of March 20, 2024, the Property Condition Disclosure Statement as set forth in Real Property Law Section 462 is being revised to include additional questions asking if the property is within a flood zone requiring flood insurance, and whether the seller has made any claims for flood damage and/or received disaster assistance from FEMA or the SBA. See, Real Property Law Section 462 [Effective March 20, 2024]

The soon-to-be enacted statutes each include language stating that “[t]his section has more than one version with varying effective dates.” It is not clear why there are varying versions or effective dates, as such, come March 20, 2024, the practitioner should definitely ensure that they are in compliance with the final versions of the statutes.