Residential SellerProperty Disclosurein Washington

Information for:

j Sellers

j Buyers

j Real Estate Licensees

040001 April 2004

Residential Seller PropertyDisclosure in Washington

The era of caveat emptor (buyer be-ware) in real estate is rapidly disap-pearing. Parallel to increased con-

sumer protection in other industries, thepurchasers of real estate, especially homes,are increasingly demanding and receivingfull information BEFORE they make a finaldecision regarding purchase of a specificpiece of real estate.

Since 1995, sellers of residential realestate have been required to provide thepurchasers with a form which details anyknown defects with the property, unless thepurchaser has expressly waived the right toreceive the disclosure statement (some otherexemptions may apply under RCW 64.06).The law applies to both for-sale-by-owner(FSBO) and real estate licensee-assistedtransactions. Several revisions to the disclo-sure law were enacted by the legislature in2003-2004.

This brochure discusses who needs todisclose, what the disclosures cover, how thedisclosures are to be made, and whendisclosure is required.

The property disclosure statementevolved in Washington State as a riskmanagement tool to protect sellers and the

Real Property TransferDisclosure Statement(Chapter 64.06 RCW)As amended 2003-2004

Property disclosure forms can beobtained for a fee from:

Washington Associationof REALTORS®

800-562-6024

Northwest MLS425-820-9200

Washington State CodeReviser’s Office

360-753-6804

Forms may also be obtained for a feefrom office supply stores. Call Washing-ton Legal Blank, 800-824-4929, for thelocation nearest you.

Also, Washington county librarieshave copies of all state regulations,which can be photocopied.

real estate licensees who represent them, aswell as to inform purchasers of actualproblems with property.

Before 1995 there were several variationsof voluntary seller disclosure forms in usearound the state, and many smaller commu-nities were unlikely to participate in sellerdisclosures at all. The underlying lawestablishing mandatory seller disclosurestatements (RCW 64.06) serves the purposeof substantially standardizing propertydisclosure in all areas of the state.

Disclosure of known material propertydefects is the responsibility of the seller.While no agency has specific enforcementauthority for this law, real estate licenseeshave independent obligations of disclosure.In Washington, the Department of Licens-ing regulates the activities of real estatelicensees.

The information contained in thisbrochure is an interpretation by the Wash-ington Center of Real Estate Research and isnot to be considered as legal advice. Theseguidelines are for information purposesonly. Questions regarding specific use of theform or the residential property disclosurelaw should be addressed to a qualified realestate attorney.

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Prepared by:Washington Center for Real Estate Research

Washington State UniversityPO Box 644844

Pullman, WA 99164-4844800-835-9683 or 509-335-7080

www.wcrer.wsu.edu

Covered Propertyj Real property consisting of, or improved

by, one to four dwelling units (includingnew construction).

j Residential condominium, unless subjectto other public offering requirements(most resale condominiums requiredisclosure).

j Residential timeshare, unless subject toother written disclosure requirements.

j Mobile or manufactured home, that ispersonal property.

Exclusionsj Foreclosure, or deed-in-lieu of foreclosure.

j Gift or transfer from parent to child orspouse to spouse (including throughdivorce).

j Transfer where buyer had interest withinlast two years, including through partner-ship, corporation, lease-holder, ortransfers in a tax deferred exchange.

j Transfer of interest other than fee simple,except where required by the disclosurelaw.

j Transfer made by personal representativeof the estate of decedent or by a trustee ina bankruptcy.

Specific DisclosuresTitle—are there any options, boundary

disputes, easements, assessments, zoningissues, covenants, etc., known to theseller?

Water—what is the condition of householdwater, irrigation and sprinkler systems?Are there any water rights issues?

Sewer/Septic Systems—are there defects ormaintenance issues in plumbing andsewer connections, septic tanks, drainfields, etc.? Are separate fees involved?

Structural*—are there problems with theroof, foundation, dry rot or pests? Is theattic insulated?

Systems and Fixtures*—what is the conditionof the electrical, plumbing, heating andcooling, security systems or satellitedishes?

Common Interest—is there a condominimumor other homeowner association thatmust be considered?

General—is the property on landfill? Arethere drainage problems? Is there damagefrom natural disasters? Are there otherenvironmental concerns, i.e., lead paint,buried fuel tanks, drug-manufacturing,radio towers, etc.?

Manufactured/Mobile Homes—have alter-ations been made? Were permits/vari-ances obtained?

Full Disclosure by Sellers—are there any otherdefects affecting the property known tothe seller?

Buyer’s Acknowledgement—buyer does notwaive obligation to be observant. Realestate licensees are not liable for inaccu-rate disclosures. Disclosure is not part ofcontract.

When?The legislation specifies several time periods,but allows for those periods to be modifiedby mutual agreement of the parties. Thedeadlines refer to standard business days(Monday-Friday, excluding holidays).

j A disclosure statement must be deliveredto buyer within five days of mutualacceptance of a purchase and sale agree-ment.

j Purchaser has three days after receipt ofthe disclosure to nullify the purchaseagreement or to modify the originalcontract.

j If a condition arises after the disclosureperiod which would have been coveredby the form, the purchaser must benotified with an amended form, or theproblem must be corrected at least threedays prior to closing the transaction.

j To revoke the offer the buyer must delivera separate signed written statement to theseller within the agreed time.

j Any time after the buyer acknowledgesreceipt of the seller’s disclosure statement,the buyer can waive his/her right torevoke the offer and accept the seller’sstatement.

j The buyer may waive the right to receivea completed disclosure statement. (Thisapproach is not recommended.)

j The option to decline to disclose and sell“as is” does not exist under the Washing-ton law.

Licensee RoleThe responsibility for completing the formlies with the seller of the property. However,real estate licensees should not simply handthe form to sellers and say it will be pickedup later. Attorneys recommend completingthe form prior to, or at the time of, taking alisting. In this way it is available in the eventa prospective purchaser wishes to see it priorto making an offer. With the form in hand,considerable time will also be saved duringthe period of negotiation, after an offer is onthe table.

In an effort to ensure both the seller andlicensee are adequately protected, it is wiseto advise the seller when completing theform. This does not mean completing theform for the seller. Perhaps the advice willtake the form of asking questions aboutrecent experiences. Perhaps it will bereacting to sellers’ responses.

* not required for newly constructed homes

For example, if the seller indicates there isno problem with the roof and the licenseehas seen a water stain on the ceiling in anupstairs bedroom, it would be wise to askabout the stain.

Real estate licensees or other partiesinvolved in the sale of the property arereleased form liability concerning thestatements made by the seller if the licenseehas no “actual knowledge” of inaccurateinformation about the property.

Buyers are still responsible for using“diligent attention and observation” inreviewing the seller’s disclosure statementand should always inspect the propertycarefully. It is still wise to engage the servicesof a qualified home inspector or otherqualified expert to understand the extent ofexpected maintenance and repair expendi-tures in the near term.

The FormThe form itself, called a “Seller DisclosureStatement,” is five pages long. For eachdisclosure item the seller is expected torespond yes, no, or don’t know. For selectedquestions, if the seller indicates a conditionis present, he/she is instructed to attach anexplanation. For example, if there is aknown boundary dispute, the seller wouldneed to disclose the nature of the dispute.

Effective January 2005, the form willinclude a notice to buyers indicating thatinformation regarding registered sex offend-ers may be obtained from local law enforce-ment agencies.

Completing the form thoroughly andhonestly can help avoid disputes andlawsuits after the sale. Going through theform may also help the seller understand thenegatives of the property as well as itsdistinguishing features.