SELLER DISCLOSURE: ALL SELLERS TO SIGN?

James L. Goldsmith, Esq.

Q: The property is owned by four people, and it will be difficult for me to get signatures from all of the owners. Is it sufficient to have the seller most familiar with the property review and sign the seller's disclosure statement? What if I get signatures from only three of the four owners?

A: Pennsylvania's Real Estate Seller Disclosure Law provides "Any seller who intends to transfer any interest in real estate shall disclose to the buyer any material defects with the property known to the seller by completing all applicable items in a property disclosure statement . . . A signed and dated copy of the property disclosure statement shall be delivered to the buyer . . ."

A clever HotLine caller observed that this language only requires all sellers to disclose, but doesn't specifically state that all sellers must sign. My response to that caller was to tell him take my name and number so he could hire me to defend him in the civil suit and disciplinary action that would likely come his way!

As difficult as it may be, there is no reasonable substitute for having each title owner to both review and sign the disclosure statement. While a review may be less meaningful when the owner is a non-resident and merely an investor, that doesn't mean that this owner won't have paid repair bills or have other information relating to the property. Regardless of their ability to contribute, all of the sellers should review and sign the disclosure.

There are occasions when it may be easier to have the seller disclosure form signed in counterpart. By that I mean, each seller signs an identical copy of the original, but not all sellers sign the same original. As long as it can be reasonably demonstrated that each seller reviewed and signed, there should be no problem.

Signing the seller disclosure in counterpart has it drawbacks. There are more papers to account for and more signatures and initials to acquire (the buyers will initial and sign every form from each seller). An advantage, however, is that each seller can make statements that reflect his/her knowledge. For example, a seller who is absentee and never lived in the property would be able to explain his status and limited knowledge on his form.

There will be circumstances when it is impossible to obtain a review and signature for each seller. Anticipated exceptions should be discussed with your broker. Power-of-attorney and other options may exist to work around the difficulties, but it may necessary to consult with your legal counsel to determine how best to protect your sellers and you.

Copyright © Brett M. Woodburn, Esquire, CALDWELL & KEARNS, P.C., 2008

All Rights Reserved

Mr. Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline. He may be reached at realcompliance.com.