Source: http://www.pabulletin.com/secure/data/vol40/40-49/2309.html
Timestamp: 2017-02-25 13:30:15
Document Index: 191899155

Matched Legal Cases: ['§\u200235', '§\u20027304', '§\u2002455', '§\u200235', '§\u200235', '§\u200235', '§\u20027103', '§\u20027103', '§\u20027103', '§\u200235', '§\u200235', '§\u200235', '§\u200235', '§\u200235', '§\u200235', '§\u20027103', '§\u2002745', '§\u2002745', '§\u200235', '§\u200235', '§\u20027304', '§\u200235']

PA Bulletin, Doc. No. 10-2309
The State Real Estate Commission (Commission) adopts §§ 35.284a and 35.335a (relating to disclosures required by the Real Estate Seller Disclosure Law; and seller property disclosure statement) to read as set forth in Annex A.
This final-form rulemaking is authorized under 68 Pa.C.S. § 7304(a) (relating to disclosure form) and sections 404 and 604(a)(15.1) of the Real Estate Licensing and Registration Act (RELRA) (63 P. S. §§ 455.404 and 455.604(a)(15.1)).
Section 35.284a tracks the duties imposed on licensees who represent sellers and buyers as well as transaction licensees under 63 Pa.C.S. Chapter 73 (relating to Real Estate Seller Disclosure Law) (act). Section 35.335a sets forth the minimum property disclosure statement required under section 7304(b) of the act.
Notice of proposed rulemaking was published at 40 Pa.B. 2281 (May 1, 2010). Publication was followed by a 30-day public comment period during which the Commission received a public comment from the Pennsylvania Association of Realtors (PAR) and comments from seven individual licensees: Frank Bartalotta, Diane M. LePera, Linda McKissick, Donna Olson, Anthony Rocchino, Terry Sutton and Robin Zellers. Following the close of the public comment period, the Commission received comments from the Independent Regulatory Review Commission (IRRC) and the House Professional Licensure Committee (HPLC). The Senate Consumer Protection and Professional Licensure Committee (SCP/PLC) did not comment.
§ 35.284a(a)—Seller's agents
§ 35.284a(b)—Buyer's agents
IRRC questioned whether ''seller's agents'' and ''buyer's agents'' adequately cover all of the agency relationships wherein a real estate licensee is required to provide a seller/buyer with the disclosure statement. PAR recommended that the Commission consider ''licensee working with the seller'' and ''licensee working with the buyer.'' The Commission concurs with IRRC and PAR that ''seller's agents'' and ''buyer's agents'' are not inclusive enough, as these titles do not include transaction licensees who have entered into agreements with sellers and buyers for document preparation and do not include subagents who work on behalf of sellers. However, because ''licensees working with the seller/buyer'' is too broad, in this final-form rulemaking the Commission amended these titles to read ''a licensee who represents sellers or a transaction licensee who has entered into an agreement with sellers'' in subsection (a) and ''a licensee who represents buyers or a transaction licensee who has entered into an agreement with buyers'' in subsection (b). As part of this amendment, the Commission addressed the HPLC's question as to whether the references to ''seller's agents'' and ''buyer's agents'' were grammatically correct by making the subject singular.
§ 35.284a(a)(1)—Seller's agent shall advise sellers of duty to disclose known material defects by completing a property disclosure statement
Terry Sutton and Robin Zellers questioned whether sellers of commercial, industrial or multifamily residential properties shall also complete the seller disclosure statements. Section 7302 of the act (relating to application of chapter) delineates that only residential properties are included in the seller disclosure requirement. ''Residential real estate transfer'' is defined in 68 Pa.C.S. § 7103(a) (relating to application of part) as consisting of ''not less than one nor more than four residential dwelling units. . . .''
Anthony Rocchino and Donna Olsen questioned whether disclosure is required for new construction, estates or bank foreclosures. Eight exceptions to the requirement that the seller disclosure statement be provided for residential properties are listed in 68 Pa.C.S. § 7103(b) and two are listed in section 7302(a) of the act. Under those sections, transfers of estates, foreclosures and new residential construction are exempt.
Anthony Rocchino also questioned whether disclosures are required when the seller has not lived in the home or investment property or managed the property actively. These scenarios do not fall within the exceptions in 68 Pa.C.S. § 7103(b) and section 7302(a) of the act and a disclosure is required. However, under section 7306 of the act (relating to information unavailable to seller), if an item of information required to be disclosed is unknown or not available to the seller, the seller may make a disclosure based on the best information available to the seller.
§ 35.284a(a)(3)—Seller shall deliver a completed disclosure statement or one marked ''refused'' to buyer/buyer's agent
PAR remarked that the act imposes the duty on the seller and not the licensee representing or working with the seller to deliver the disclosure statement. However, PAR acknowledged that in most cases licensees involved in the transaction assume this responsibility. The Commission concurs with PAR and therefore, under this paragraph, requires licensees who represent sellers or transaction licensees who have entered into agreements with sellers to deliver either the completed disclosure statement or one marked refused.
Linda McKissick commented that sellers should not be permitted to refuse to complete the seller disclosure statement. Further, PAR commented that requiring the delivery of refused-marked statements could potentially increase the number of sellers who refuse to complete seller disclosure statements and increase liability. IRRC requested that the Commission address the impact of requiring delivery of disclosure statements marked ''refused.''
Section 7311 of the act (relating to failure to comply) permits sellers to refuse to provide the disclosure statement by stating that the transaction will not be invalidated because the seller fails to provide the disclosure statement. Thus, the ability to refuse is not new. Requiring sellers to mark the disclosure statements refused provides applicable licensees with documentary evidence that they satisfied their duties. Further, there is no empirical evidence to suggest that the number of refusals will increase simply because licensees shall deliver the refused-marked statement. To the contrary, it is not financially advantageous for sellers to refuse. First, section 7311 of the act subjects sellers who fail to complete disclosure statements to damages for failure to comply with the disclosure requirement. Second, because as PAR points out, it is commonplace for completed disclosure statements to be transmitted to the multiple listing service (MLS) and made available online. For marketing purposes, it would be highly noticeable for a seller not to include a completed disclosure statement with the listing.
The Commission is also not persuaded by the concern that liability for licensees will increase because they will have more to disclose under the act, in that section 7310 of the act (relating to nonliability of agent) places an affirmative obligation of disclosure on agents for sellers and buyers who have actual knowledge of a material defect that was not disclosed to the buyer or of a misrepresentation regarding a material defect. Because this comment is premised on increased refusals and because the obligation on licensees to report known material defects is also not new, it is also only speculative that there will be an increase in liability. In this final-form rulemaking, the Commission did not amend this provision.
Both IRRC and PAR question what delivery method would be satisfactory under this provision. PAR recommended that the Commission add the clause ''publishing the Seller's Property Disclosure Statement at a location where selling agents have access.'' While the Commission concurs with PAR that placement on the MLS is commonly used and would in fact favor this method, section 7305 of the act (relating to delivery of disclosure form) restricts the method of delivery to ''personal delivery; first class mail; certified mail, return receipt requested; or facsimile transmission.'' Until the act is amended, the Commission cannot permit online delivery to satisfy the statutory requirement. Accordingly, it has not incorporated the language recommended by PAR.
§ 35.284a(b)(1)—Buyer's agent shall advise buyers of seller's duty
In the event that the buyer is not represented, PAR recommended that the Commission should require that the licensee who has entered into a business relationship with the seller bear the responsibilities in § 35.284a(b)(1). While the Commission has chosen not to implement this affirmative duty, it believes that this conversation will occur when, under subsection (a)(3), licensees who represent sellers or transaction licensees who have entered into agreements with sellers deliver either the completed disclosure statement or one marked refused to the buyer when the buyer does not have representation.
§ 35.284a(b)(2)—Buyer's agent shall deliver a completed disclosure statement or one marked ''refused'' to buyer
PAR commented that delivery of the completed/refused-marked disclosure statement by the buyer's agent would be redundant if delivery had already been made under subsection (a). IRRC requested the Commission to clarify this issue. The Commission concurs with this comment and changed the requirement from delivery to assurance that delivery has been made.
§ 35.284a(c) and (d)—Seller's agents and buyers agents are required to disclose known defects but are not required to make independent inspection
IRRC requested that the Commission address whether these subsections should apply to anyone involved in the transaction. Like its comment to subsections (a) and (b), PAR recommended that they do. The Commission concurs with PAR and revised these subsections consistent with the changes made to subsections (a) and (b).
Diane M. LePera questioned what are ''known material defects.'' Section 7102 of 68 Pa.C.S. (relating to definitions) defines ''material defect'' as ''a problem with a residential real property or any portion of it that would have a significant adverse impact on the value of the property or that involves an unreasonable risk to people on the property. The fact that a structural element, system or subsystem is near, at or beyond the end of the normal useful life of such a structural element, system or subsystem is not by itself a material defect.'' When sellers, licensees representing sellers/buyers or transaction licensees who have entered into agreements with them know of these conditions it is a ''known material defect.''
Linda McKissick questioned whether this section requires licensees to verify the information provided by seller on the disclosure statement. Under section 7310 of the act, licensees representing sellers/buyers or transaction licensees who have entered into agreements with them are not liable for a violation of the act unless the aforementioned licensee had actual knowledge of a material defect that was not disclosed to the buyer or of a misrepresentation regarding a material defect. In fact, while sellers are required to provide accurate information about known material defects under sections 7303 and 7308 of the act (relating to disclosure of material defects; and affirmative duty of seller), they are not required to conduct a specific investigation or inquiry in an effort to complete the property disclosure statement.
§ 35.335a—Seller disclosure statement
PAR commented that Question (12) on the disclosure statement should require a listing of items that are included in the sale and not just those in need of repair. In that 68 Pa.C.S. § 7103 only requires sellers to disclose material defects, the Commission believes that it is overly burdensome to require a listing of appliances that are included in the sale rather than simply those that are in need of repair.
The HPLC recommended that the Commission delete the address and telephone number in Question (13) so that the regulations would not have to be amended in the event that the Mine Subsidence Insurance Fund changes its address or telephone number. The Commission agrees with the HPLC and deleted this information.
The HPLC questioned whether it would be useful to list another reason for easements other than utility service in Question (13)(vi). The Commission appreciates that in addition to utility service easements may be granted for flag-lots, walking trails and shared driveways. Nonetheless, because the act only lists utility service and the Commission chose not to amend the former disclosure statement in another area aside from removing an address and a telephone number at the HPLC's urging, the Commission has not amended this question.
Frank Bartakotta recommended that the Commission include specific questions about lead-based paint and mold on the disclosure statement. These conditions are currently included within Question (14) on the disclosure form. A further amendment is not required.
The HPLC questioned why there was an asterisk in Question (15) following ''condominium.'' The Commission removed this typographical error in this final-form rulemaking.
The final-form rulemaking will not have adverse fiscal impact or paperwork requirements on the Commission, licensees, the Commonwealth, its political subdivisions or the public sector.
The Commission continually monitors the effectiveness of its regulations through communication with the regulated population; accordingly, a sunset date has not been set.
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 21, 2010, the Commission submitted a copy of the notice of proposed rulemaking, published at 40 Pa.B. 2281, to IRRC and the Chairpersons of the HPLC and the SCP/PLC for review and comment.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on September 28, 2010, the final-form rulemaking was approved by the HPLC. On October 20, 2010, the final-form rulemaking was deemed approved by the SCP/PLC. Under section 5.1(e) of the Regulatory Review Act, IRRC met on October 21, 2010, and approved the final-form rulemaking.
Further information may be obtained by contacting Patricia Ridley, Administrator, State Real Estate Commission, P. O. Box 2649, Harrisburg, PA 17105-2649, (717) 783-3658.
(3) The amendments to the final-form rulemaking do not enlarge the purpose of proposed rulemaking published at 40 Pa.B. 2281.
(4) This final-form rulemaking is necessary and appropriate for administering and enforcing the authorizing acts in Part B of this preamble.
The Commission, acting under its authorizing statutes, orders that: (a) The regulations of the Commission, 49 Pa. Code Chapter 35, are amended by adding §§ 35.284a and 35.335a to read as set forth in Annex A.
(b) The Commission shall submit this order and Annex A to the Office of General Counsel and the Office of Attorney General as required by law.
JOSEPH TARANTINO, Jr., Chairperson
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 40 Pa.B. 6487 (November 6, 2010).)
Fiscal Note: Fiscal Note 16A-5618 remains valid for the final adoption of the subject regulations.
§ 35.284a. Disclosures required by the Real Estate Seller Disclosure Law.
(a) A licensee who represents sellers or a transaction licensee who has entered into an agreement with sellers shall:
(1) Advise sellers of their duty to disclose any known material defects with the property by completing a property disclosure statement that satisfies the requirements in 68 Pa.C.S. § 7304 (relating to disclosure form).
(2) Provide sellers with a property disclosure statement that meets or exceeds the disclosures set forth in § 35.335a (relating to seller property disclosure statement).
(3) Deliver the completed property disclosure statement or the property disclosure statement marked ''refused'' to the buyer, the licensee who represents the buyer or the transaction licensee who has entered into an agreement with the buyer prior to the execution of an agreement of sale.
(b) A licensee who represents buyers or a transaction licensee who has entered into an agreement with buyers shall:
(1) Advise buyers that sellers have a duty to provide a completed property disclosure statement.
(2) Assure that the completed property disclosure statement or the property disclosure statement marked ''refused'' was delivered to the buyer prior to the execution of an agreement of sale.
(c) Licensees described in subsections (a) and (b) are required to disclose, to the buyer in writing, all material defects that are not otherwise disclosed and of which the licensee has actual knowledge.
(d) Licensees described in subsections (a) and (b) are not required to conduct an independent investigation to confirm seller's disclosures on the property disclosure statement.
(1) Seller's expertise. The seller does not possess expertise in contracting, engineering, architecture or other areas related to the construction and condition of the property and its improvements, except as follows: __________
(2) Occupancy. Do you, the seller, currently occupy this property? ______ yes ______ no
If ''no,'' when did you last occupy the property? __________
(3) Roof.
(i) Date roof was installed: ______ . Documented? ______ yes ______ no ______ unknown
(ii) Has the roof been replaced or repaired during your ownership? ______ yes ______ no
If ''yes,'' were the existing shingles removed? ______ yes ______ no ______ unknown
(iii) Has the roof ever leaked during your ownership? ______ yes ______ no
(iv) Do you know of any problems with the roof, gutters or downspouts? ______ yes ______ no
(4) Basements and crawl spaces (Complete only if applicable).
(i) Does the property have a sump pump? ______ yes ______ no ______ unknown
(ii) Are you aware of any water leakage, accumulation or dampness within the basement or crawl space? ______ yes ______ no
If ''yes,'' describe in detail: __________
(iii) Do you know of any repairs or other attempts to control any water or dampness problem in the basement or crawl space? ______ yes ______ no
If ''yes,'' describe the location, extent, date and name of the person who did the repair or control effort: __________
(5) Termites/wood destroying insects, dry rot, pests.
(i) Are you aware of any termites/wood destroying insects, dry rot or pests affecting the property? ______ yes ______ no
(ii) Are you aware of any damage to the property caused by termites/wood destroying insects, dry rot or pests? ______ yes ______ no
(iii) Is your property currently under contract by a licensed pest control company? ______ yes ______ no
(iv) Are you aware of any termite/pest control reports or treatments for the property in the last five years? ______ yes ______ no
(6) Structural items.
(i) Are you aware of any past or present water leakage in the house or other structures? ______ yes ______ no
(ii) Are you aware of any past or present movement, shifting, deterioration or other problems with walls, foundations or other structural components? ______ yes ______ no
(iii) Are you aware of any past or present problems with driveways, walkways, patios or retaining walls on the property? ______ yes ______ no
(7) Additions/remodeling. Have you made any additions, structural changes or other alterations to the property? ______ yes ______ no
If ''yes,'' please describe: __________
(8) Water and sewage.
(i) What is the source of your drinking water? ______ public ______ community system ______ well on property ______ other
(ii) If your drinking water source is not public: __________
When was your water last tested? __________
What was the result of the test? __________
Is the pumping system in working order? ______ yes ______ no
If ''no,'' please explain: __________
(iii) Do you have a softener, filter or other purification system? ______ yes ______ no
If ''yes,'' is the system: ______ leased ______ owned
(iv) What is the type of sewage system? ______ public sewer ______ private sewer ______ septic tank ______ cesspool ______ other If ''other,'' please explain: __________
(v) Is there a sewage pump? ______ yes ______ no
If ''yes,'' is it in working order? ______ yes ______ no
(vi) If applicable, when was the septic system or cesspool last serviced? __________
(vii) Is either the water or sewage system shared? ______ yes ______ no
If ''yes,'' please explain: __________
(viii) Are you aware of any leaks, backups or other problems relating to any of the plumbing, water and sewage-related items? ______ yes ______ no
(9) Plumbing system.
(i) Type of plumbing: ______ copper ______ galvanized ______ lead ______ PVC ______ unknown ______ other
(ii) Are you aware of any problems with any of your plumbing fixtures (including, but not limited to: kitchen, laundry or bathroom fixtures, wet bars, hot water heater, etc.)? ______ yes ______ no
(10) Heating and air conditioning.
(i) Type of air conditioning: ______ central electric ______ central gas ______ wall ______ none
(ii) List any areas of the house that are not air conditioned: __________
(iii) Type of heating: ______ electric ______ fuel oil ______ natural gas ______ other
(iv) List any areas of the house that are not heated: __________
(v) Type of water heating: ______ electric ______ gas ______ solar ______ other
(vi) Are you aware of any underground fuel tanks on the property? ______ yes ______ no
Are you aware of any problems with any item in this section? ______ yes ______ no
(11) Electrical system. Are you aware of any problems or repairs needed in the electrical system? ______ yes ______ no
(12) Equipment and appliances.
The following items included in the sale are in need of repair or replacement: __________
(13) Land (soils, drainage and boundaries).
(i) Are you aware of any fill or expansive soil on the property? ______ yes ______ no
(ii) Are you aware of any sliding, settling, earth movement, upheaval, subsidence or earth stability problems that have occurred on or that affect the property? ______ yes ______ no
NOTE TO BUYER: Some properties may be subject to mine subsidence damage. Maps of the counties and mines where mine subsidence damage may occur and mine subsidence insurance are available through the Department of Environmental Protection, Mine Subsidence Insurance Fund. (iii) Are you aware of any existing or proposed mining, strip mining or any other excavations that might affect this property? ______ yes ______ no
(iv) To your knowledge, is this property or part of it located in a flood zone or wetlands area? ______ yes ______ no
(v) Do you know of any past or present drainage or flooding problems affecting the property? ______ yes ______ no
(vi) Do you know of any encroachments, boundary line disputes or easements? ______ yes ______ no
NOTE TO BUYER: Most properties have easements running across them for utility services and other reasons. In many cases, the easements do not restrict the ordinary use of the property, and the seller may not be readily aware of them. Buyers may wish to determine the existence of easements and restrictions by examining the property and ordering an abstract of title or searching the records in the Office of the Recorder of Deeds for the county before entering into an agreement of sale.
(vii) Are you aware of any shared or common areas (for example, driveways, bridges, docks, walls, etc.) or maintenance agreements? ______ yes ______ no
Explain any ''yes'' answers that you give in this section: __________
(i) Are you aware of any underground tanks or hazardous substances present on the property (structure or soil), including, but not limited to, asbestos, polychlorinated byphenyls (PCBs), radon, lead paint, urea-formaldehyde foam insulation (UFFI), etc? ______ yes ______ no
(ii) To your knowledge, has the property been tested for any hazardous substances? ______ yes ______ no
(iii) Do you know of any other environmental concerns that might impact upon the property? ______ yes ______ no
Type: ______ condominium* ______ cooperative ______ homeowners association ______ other
(16) Miscellaneous.
(i) Are you aware of any existing or threatened legal action affecting the property? ______ yes ______ no
(ii) Do you know of any violations of Federal, State or local laws or regulations relating to this property? ______ yes ______ no
(iii) Are you aware of any public improvement, condominium or homeowner association assessments against the property that remain unpaid or of any violations of zoning, housing, building safety or fire ordinances that remain uncorrected? ______ yes ______ no
(iv) Are you aware of any judgment, encumbrance, lien (for example, comaker or equity loan) or other debt against this property that cannot be satisfied by the proceeds of this sale? ______ yes ______ no
(v) Are you aware of any reason, including a defect in title, that would prevent you from giving a warranty deed or conveying title to the property? ______ yes ______ no
(vi) Are you aware of any material defects to the property, dwelling or fixtures which are not disclosed elsewhere on this form? ______ yes ______ no
The undersigned seller represents that the information set forth in this disclosure statement is accurate and complete to the best of the seller's knowledge. The seller hereby authorizes any agent for the seller to provide this information to prospective buyers of the property and to other real estate agents. The seller alone is responsible for the accuracy of the information contained in this statement. The seller shall cause the buyer to be notified in writing of any information supplied on this form that is rendered inaccurate by a change in the condition of the property following the completion of this form.
SELLER ______ DATE ______ SELLER ______ DATE ______ SELLER ______ DATE ______
______ DATE _________________
The undersigned buyer acknowledges receipt of this disclosure statement. The buyer acknowledges that this statement is not a warranty and that, unless stated otherwise in the sales contract, the buyer is purchasing this property in its present condition. It is the buyer's responsibility to satisfy himself or herself as to the condition of the property. The buyer may request that the property be inspected, at the buyer's expense and by qualified professionals, to determine the condition of the structure or its components.
BUYER ______ DATE ______ BUYER ______ DATE ______ BUYER ______ DATE ______
[Pa.B. Doc. No. 10-2309. Filed for public inspection December 3, 2010, 9:00 a.m.]