Saturday, February 25, 2023 / by Amy Brown
The NC Residential Property and Owners’ Association Disclosure Statement is mandatory for every resale listed home in the multiple listing service and identifies the age and condition of the basic and most expensive mechanical, structural, and legal aspects of the property that you should be aware of prior to entering into a sales contract. It is crucial to review this statement before wasting precious time driving to properties that may have functional defects that would disqualify them for you from the start.
This disclosure identifies all major mechanical and structural items along with their age and type such as the roof, heating system, and type of exterior. It also notifies the prospective buyer of any legal matters that are important to the sale such as encroachments, homeowners' association requirements, flood zones, easements, shared driveways, excessive noise, toxic substances, structural additions, and soil stability. The following is an example of one of the pages from the disclosure:
The disclosure can also prepare you for major expenses that you can anticipate if you decide to move forward on a purchase for a home that may be functional today but has aging structures that will need to be replaced or repaired in the near future. When utilized, it can be a great financial planning tool for maintenance expenses.
I would like all buyers to take note, though, of the boxes on the far right side that say “no representation” and be aware of the following NC real estate law. In NC, “no representation” means that the seller either doesn’t know OR chooses not to disclose a known defect. This is perfectly within the bounds of the law. In order to avoid liability, some sellers will choose not to disclose defects, even if they know them to exist, so that they can avoid repercussions following the close of the sale. The only time that a seller is legally liable for a defect is when they have marked “No” and the defect is then discovered. You will see “no representation” marked most often on homes that are “flips”. This is because the builder wants no legal liability for a property that he has purchased and renovated merely for profit.
This, in itself, should speak volumes to you, as a buyer. This necessitates the need for additional inspections and time for discovery in order to investigate the property to its fullest thus lengthening the contract periods. In some cases, it can also indicate the tone of the sale meaning that a seller who does not wish to enter a business agreement in full transparency may be more unwilling to negotiate terms and price if any defect is discovered.