PROPERTY CONDITION DISCLOSURES Regarding the condition of a

PROPERTY CONDITION DISCLOSURES

Regarding the condition of a property…. WHO DISCLOSES? WHAT DO THEY DISCLOSE? HOW AND WHEN DO THEY DISCLOSE?

Sellers of a residential property in Virginia must disclose four things about the property, if they exist: SELLER REQUIRED DISCLOSURE S 1) The property was once used as a manufacturing place for methamphetamine and has not been properly remediated; 2) The property has pending building or zoning violations; 3) The property has a stormwater detention facility with maintenance and inspection requirements; * and 4) The property is located adjacent to a military air installation.

RESIDENTIAL PROPERTY DISCLOSURE ACT: DUE DILIGENCE CATEGORIES • Condition of property and improvements; • Presence/maintenance of wastewater facilities; • Any matters pertaining to adjacent parcels; • Right to install or use solar collection; • Historic District ordinances; • Resource protection areas; • Presence of sexual predators in the area; • If property is in a Special Flood Hazard area; • Whether property is subject to any easement, including conservation; • Community Development authority; • Dam break inundation zones; • Existence of lead pipes; * • Condition or status of impounding structure or dam; * • If located in Radon Zones 1 or 2; * and • Presence of defective drywall. ^

SELLER DISCLOSURES: HOW TO DISCLOSE • Use appropriate form, found either through DPOR or Virginia REALTORS. • Disclose before contract is ratified. • Buyer options: Don’t sign contract or waive by signing.

Agents are required to disclose: AGENT DISCLOSURE S • material adverse facts pertaining to the physical condition of the property, of which they have actual knowledge; • the existence of defective drywall; and • "pertinent facts" related to the transaction.

Broader than a “defect” MATERIAL ADVERSE FACT Something that may deter a reasonable buyer from buying a home Subjective analysis

PHYSICAL CONDITION OF THE PROPERTY Specifically relates to the physical property itself, nothing outside the property Does not apply to zoning/governmental decisions

You must actually know the adverse fact to be required to disclose it. ACTUAL KNOWLEDGE What about the inspection report?

AGENTS: HOW TO DISCLOSE DISCUSS WITH YOUR CLIENTS BEFORE BE CLEAR WHO IS DISCLOSING AND UNDER WHAT OBLIGATION IN WRITING – NO SPECIFIC FORM

Sellers : • The property was once used as a manufacturing place for methamphetamine and has not been properly remediated; • The property has pending building or zoning violations; • The property has a stormwater detention facility with maintenance and inspection requirements; and • The property is located adjacent to a military air installation. Agents : Any material adverse fact pertaining to the physical condition of the property, of which they have actual knowledge, including defective drywall, and "pertinent facts" relating to the transaction. COMPARING DISCLOSURE OBLIGATIONS

Q: Under Virginia law, do the property Q&A owner and the listing agent have an obligation to disclose the existence of a halfway house for parolees in the neighborhood? A: Neither the property owner nor the agent must disclose this. While it may arguably be an adverse fact, it is not about the physical condition of the property itself.

Q: I represent the buyer in a Q&A transaction. We received the Residential Property Disclosures Acknowledgment Form before ratifying the contract. After ratifying the contract, the seller disclosed the property has a stormwater maintenance requirement with the state. What are my client’s options? A: Because this required disclosure was provided after the contract was ratified, your client now has three days to terminate the contract. If they do not terminate in that three-day window, they will have waived the right to terminate for this reason and the contract will move forward.