Seller’s Property Disclosure: From the Buyer’s Side

A lot of education about the Seller’s Disclosure Law is about a seller’s responsibilities. But what are some things that buyers (and their agents) should be taking into consideration when reviewing the Seller’s Property Disclosure Statement (Form SPD)? In discussing the form with buyers, it is often helpful to discuss what is not a material defect and what the form often does not provide to buyers. 

What is a material defect? 

The primary purpose of the law is to have the seller disclose “material defects” to prospective buyers so they can be aware of potential issues with the property as part of the transaction. A material defect is defined as “a problem with the property or any portion of it that would have a significant adverse impact on the value of the residential real property or that involves an unreasonable risk to people on the land. The fact that a structural element, system or subsystem is near, at or beyond the end of its normal useful life is not by itself a material defect.” 49 Pa. Code 35.335a.    

When filling out the seller disclosure form, the seller is required to answer all the questions on the form – some of which may not look like they’re asking about “material defects” – but that doesn’t mean that the seller is required to spontaneously discuss every little thing they may know about every aspect of the property. For example, there won’t be a list of every jiggly doorknob or sticky drawer. The disclosure form is not a complete inventory of everything; it’s just answers to the questions that are asked, and often no more. 

Disclosure is not a warranty. 

A seller is required to disclose their knowledge of the property, which is significantly different than disclosing the actual condition of the property. For example, a seller might disclose that their HVAC system is 15 years old and that they’re not aware of any problems with the system. That doesn’t mean they’re warranting that it will run perfectly for the next 15 years – or even for the first 15 days after closing – it just means that they’re not aware of anything at the time they filled out the form. Things sometimes fail or break the day after settlement or six months down the road. Though a seller might have lied on their form, these are often not disclosure issues, but just really unfortunate timing. 

More than the form. 

If there is an issue that the buyer is extra sensitive to, or there is a super high priority that the buyer has, keep that in mind as you’re checking every disclosure in the process. Does the buyer’s daughter have asthma, so mold is a deal breaker? Does the buyer drive an electric vehicle, so they have a minimum amp requirement for their charger to be installed? Be sure to spend extra time reviewing the form and possibly asking additional questions of the seller. But more importantly, don’t just rely on the information in that form to ensure that the buyer is getting the information they need. If someone in the house is particularly sensitive to mold, get an indoor air quality inspection. There might be a problem that the seller hasn’t seen and doesn’t react to, so they could be perfectly honest on the form and the buyer wouldn’t realize there was an issue. Or if your buyer knows they need 200-amp service for a vehicle charger, don’t assume that your average seller is an expert in electrical systems – make sure to have an electrician verify service and that it would be feasible to run the lines to where the buyer needs them. We often tell sellers to “disclose, disclose, disclose!”, but it’s also true that buyers need to “read, understand and test” in order to make sure they’re getting as complete a picture of the current status of the property as they need to make an informed purchase decision. The buyer and buyer agent should take their time to fully review the disclosure, discuss the potential issues, do their own inspection and have reasonable expectations of what they see in the disclosure.