In recent years, both the federal and state laws relating to the sale of real estate have been modified, imposing disclosure requirements upon those who sell real estate. First, the federal government stepped in by issuing regulations enforcing the Residential Lead-Based Paint Hazard Act of 1992. These regulations require disclosures relating to the use of lead-based paint for the sale or lease of homes (or apartments) built before 1978. The required disclosures under these regulations are very specific and include a provision requiring the seller/landlord to give the possible purchaser/tenant a booklet approved by the Environmental Protection Agency.

While the Lead-Based Paint Disclosure regulations were well-publicized, Pennsylvania has enacted a more extensive law which has not been the subject of much publicity. The Real Estate Seller Disclosure Act, which became effective on September 2, 1996, requires almost anyone who sells residential real estate in the state to provide certain information to any potential purchaser before that purchaser signs a sales agreement or lease. This Act applies to any transfer of an ownership interest in real estate consisting of one to four residential dwelling units with certain exceptions. Transactions which are excepted include: (1) transfers by court order (such as may arise during the probating of an estate, in bankruptcy cases, or through eminent domain); (2) transfers through or after mortgage foreclosures or similar proceedings; (3) a transfer made in the administration or an estate or trust; (4) transfers from one co-owner to another; (5) transfers between spouses or parents and children; (6) transfers from corporations or partnerships to their shareholders or partners during liquidation; and (7) transfers of new homes, provided certain inspections are performed and a one-year written warranty is given to the purchaser. The common thread throughout these exceptions is that in each instance the seller is unlikely to have first-hand knowledge of the condition of the property superior to that of the purchasers.

If a sale is not within one of the exempt categories, the Act requires the seller to complete a "property disclosure statement" listing material defects of the property and to deliver a signed and dated copy of that statement to the purchasers before the purchaser signs any written agreement to purchase the property. The disclosure statement must be in the form set forth in the Act, which is designed to ensure that the seller discloses to the purchaser all known material defects of the property. The form first advises the purchaser of the level of the seller’s knowledge of the condition of the property (i.e., whether or not the seller has resided in the property for a significant time). It then addresses those conditions which are most likely to constitute material defects and which may be overlooked by a typical purchaser. These conditions include: the age of the roof and any repairs to it; the condition of the basement, including water leakage; any history of termite or other pests; any past problems with walls, foundations, etc.; any past water or sewage problems; any past problems with plumbing, electrical, heating or air conditioning systems; and other similar factors.

It is important to note that the seller is not required to inspect the property or investigate any of the conditions in the statement. Instead, he or she may rely on the facts known when the form is completed. However, the seller should not "guess" or fill in any information about which he or she is unsure. The answers must be truthful and as accurate as possible. In addition, the seller has a duty to notify the buyer of any information in the disclosure which later becomes inaccurate.

If the seller does not comply with the Act, he or she is liable to the purchaser for any actual damages suffered by the purchaser as a result. Although the Act does not indicate what such damages will be, presumably they would include the total cost of repairing any defect which was not disclosed. On the other hand, the Act also provides protection for the seller by preventing a purchaser from suing a seller for any defect which is disclosed in the statement.

Although the Act creates a duty to provide a written statement of any defects, it does not modify existing law with respect to the seller’s duty to disclose defects. Pennsylvania law has long required that sellers disclose any defective conditions which are not obvious to potential purchasers. Most attorneys who practice real estate law have encountered cases concerning this issue. Unfortunately, those cases generally have involved alleged oral representations and therefore become "he said, she said" arguments, forcing a judge or jury to decide who is telling the truth. With the enactment of this new law, that situation should change since it will be clear exactly what disclosures were made. However, by the same token, it is extremely important that the seller accurately and fully complete the disclosure form since he or she will be responsible for any defects which are not disclosed in the form.

If a real estate agent is involved in the sale of your property, he or she is required to advise you of your duty to disclose the information and will be able to provide the necessary form. If no agent is involved, you will still need to complete a disclosure form which you will probably wish to obtain from your attorney. Remember, the work of completing the disclosure form now will be rewarded by your protection later.