A common issue: do you disclose it?

Imagine you’re listing a condominium for sale. The unit itself is great; the sellers have never experienced any problems with it; there is nothing to disclose!  But… there’s a recurring problem down the hall, in the common area. This problem doesn’t affect the sellers’ unit directly in any way, but it’s unpleasant enough that you know prospective buyers would want to know about it. Do you disclose it?

Let’s start with the legal analysis. The Pennsylvania Sellers’ Disclosure Law does NOT require the seller to disclose this problem. When selling a condo, the seller is only required to disclosure material defects affecting the seller’s unit; “owners are not obligated…to make any disclosure with respect to any common elements or common facilities.” There are many disclosures that condo owners must make under the Uniform Condominium Act.  The owner must disclose and provide a copy of the declarations, bylaws, and association rules and regulations. The seller is also responsible for getting a resale certificate from the association. This resale certificate contains 17 different disclosures, and none of these disclosures involve common elements or facilities.

What does this mean for you, the listing agent? The law doesn’t require the seller to disclose this recurring problem, but the seller may if they so choose.  Have a frank discussion with them; if the sellers feel more comfortable disclosing this problem, they probably should. Remember, the new owners will very quickly become aware of this problem and will likely be quite agitated that no one told them about this sooner.  Will they file a lawsuit? Maybe.  Will they file a complaint against you for not disclosing what you know about the property? Possibly. Will they malign your reputation and (formerly) good name to anyone who will listen? Count on it

Consider, too, that a problem that is prevalent in a common area may in fact also affect the sellers’ unit, bringing it within the purview of the Sellers’ Disclosure Law. For example, what if the problem is a leaky roof over a common area? While that doesn’t seem to directly affect your sellers’ unit, if necessary repairs to the roof would result in an assessment, then the problem would have to be disclosed.

The moral of the story is, although the Seller Disclosure Law is spelled out in pretty clear language, the risk that a disgruntled buyer would pose to your reputation (and probably your seller’s wallet) might make it worth it for your seller to simply disclose, disclose, disclose.