What information must sellers disclose to potential buyers regarding condo and co-op repairs? Repairs can be expensive and time consuming. Co-op and condo boards may take a substantial amount of time when determining how to go forward with certain repairs. For shareholders and unit owners who do not want to contribute to building repair costs and are eager to move out, must they disclose the defect to potential sellers? Pursuant to the Property Condition Disclosure Act 2002, sellers are required to disclose certain information to buyers before closing or the buyer can waive this right in return for a $500 credit on the purchase price. However, this only applies to one to four family dwellings, and not to co-ops and condos.
In New York, sellers cannot actively conceal any defects or provide misleading information to the potential buyer. New York courts follow the doctrine of caveat emptor (“let the buyer beware”), which puts the burden on the buyer to ensure that the property is in the condition advertised and to ask for inspections to be performed. The seller does not have the obligation to disclose information to the buyer. However, if the seller has a special relationship of trust and confidence with the potential buyer, the seller is required to disclose defects. Sellers are required to disclose whether there is a condition or defect that materially impairs the value of the property, if “(I) the issue was created by the seller and (II) the facts about the matter are peculiarly within the knowledge of the seller, or unlikely to be discovered by a prudent purchaser”.[1]
It is good practice to discuss the necessary repairs and costs with your broker, who can then relay the information to potential buyers. Co-op and condo boards who have discussed the need for repairs during board meetings will have the details of the issue in the meeting minutes. These minutes will typically be disclosed to future buyers or their attorney’s during the due diligence process. Disclosing issues early on, although not required, will ultimately create a relationship of trust between the seller and buyer and help the sale go smoothly.
[1] Odenthal, M. (Feb. 2017) “Rules of Disclosure.” The Cooperator. Available at: https://cooperator.com/article/rules-of-disclosure/full. Accessed on June 22, 2018.