Chapter 7: Property Condition Disclosure
A recent homebuyer is upset with a Mississippi real estate licensee who didn't disclose that the property was the site of illegal trafficking activities, and is threatening to file a lawsuit. Did the licensee fail in the duty to disclose?
No, licensees aren't required to disclose that a property was the site of illegal activity that doesn't affect the material condition of the property. - Real estate licensees aren't required to disclose that a property was or was suspected to be the site of illegal activity that didn't affect the material condition of the property, nor can legal action be sought against licensees for failing to do so.
Shirley's Mississippi home has been sold as a result of foreclosure proceedings. Does she need to provide the purchaser with a Property Condition Disclosure Statement?
No, transfers resulting from foreclosure sales are exempt.
Examples of transfers resulting from a. court order that don't require PCDS?
-Lender-issued writ of execution to seize the property -Foreclosure sale -Estate resolution by probate court or a fiduciary -Bankruptcy -Eminent domain -Transaction party lawsuit
What factors make a property stigmatized?
1) A previous occupant died, regardless of cause. 2) An occupant was afflicted by or exposed to HIV/AIDS. 3) A felony crime occurred. 4) A sex offender lived at the property (or one lives nearby).
When does the buyer have the right to void the contact?
1) The disclosure form was received after submitting an offer or upon entering into a sales contract. 2)The PCDS doesn't reflect the true property condition. 3) There were changes in property condition, and the sellers didn't provide an amended PCDS.
Which of the following transactions is exempt from Mississippi disclosure requirements? 1) A condo lease that offers the lessee the option to buy 2) A court-ordered sale due to a foreclosure sale 3) A house for sale by owner 4) A house listed for sale by a real estate licensee
A court-ordered sale due to a foreclosure sale
where does the lichees attach the disclosure to ensure potential buyers have all the pertinent information?
to the listing agreement
t/f Licensees can't be held liable by any party to a residential real estate transaction for the seller's failure to disclose any information regarding the property.
true
t/f Under no circumstances may the licensee complete the disclosure on behalf of the seller/developer, or fill in missing information.
true
When a question doesn't pertain to the property, it should be marked as?
" not applicable" or "N/A"
At closing date approaches what must the seller provide?
As the closing date approaches, the seller must provide a current version of the PCDS as verification that the property condition hasn't changed.
One of your seller clients, Jeremy, expresses concern about having to complete a Property Condition Disclosure Statement. You ease his fear by correctly advising him that _______.
By disclosing known defects, he will protect himself from liability lawsuits down the road.
Salesperson Candice provided her seller client Barb with a blank PCDS form. Barb filled it out and gave it back to Candice. Which of the following is Candice's responsibility according to Mississippi regulations? 1) Ask Barb about some unanswered questions on the PCDS and complete them with Barb's answers. 2) Clarify what's being asked in any unanswered questions on the PCDS that Barb didn't understand, and ask her to write in the answers to the missing questions. 3) Write N/A for all questions left blank. 4) Tear up the PCDS and ask Barb to start over with a new one if there's incorrect information.
Clarify what's being asked in any unanswered questions on the PCDS that Barb didn't understand, and ask her to write in the answers to the missing questions. - The licensee should provide guidance to the seller client if there are any questions regarding how to interpret any items on the PCDS.
Buyer Arthur had his agent submit an offer on a three-bedroom townhouse in Tupelo on April 5. The sellers accepted the offer on April 6, and all signatures were finalized by April 7. Anthony is the sellers' representative. What has Anthony failed to do that could cause problems for the transaction?
He didn't provide the buyer with a disclosure statement within the permitted timeframe. The buyer can terminate the contract if the disclosure statement weren't provided. It's the agent's job to provide the PCDS as soon as possible, and definitely before the offer is submitted.
You're representing Cassidy, who's selling her family home in Biloxi. Which of these facts about the home is considered a stigmatizing factor? 1) Her husband's suicide on the premises last year 2) The basement flooding that occurred one time after a heavy rain event 3) The home's location in a common interest community 4) The presence of a raccoon's nest in the attic
Her husband's suicide on the premises last year
Which of the following is a duty relating to the PCDS that's required of a licensee who's representing the seller in a transaction? 1) Ask the seller about each of the questions on the PCDS and fill out the disclosure form on the seller's behalf. 2) Complete the PCDS based on a physical evaluation of the property condition. 3) Inform the seller of the importance of disclosing accurate material facts, and describe the potential repercussions for including false information on the PCDS. 4) Provide the seller with an analysis of whether the property's major systems need repair or replacement.
Inform the seller of the importance of disclosing accurate material facts, and describe the potential repercussions for including false information on the PCDS. -Licensees should refrain from providing recommendations outside their scope of practicing real estate.
Why do sellers and licenses not have to disclose stigmatizing information to potential buyers?
Information about a stigmatized property is not considered material, so sellers and licensees don't have to disclose stigmatizing information to potential buyers.
Mississippi buyers Tom and Rosanne are interested in a property, but before making an offer, they want to make sure there aren't any registered sex offenders living in the neighborhood. Which statement is most accurate?
It's up to the buyer to perform due diligence and research whether sex offenders live in the area. Licensees can direct clients to the state's registry.
Which of the following scenarios describes an example of unilateral rescission in Mississippi? 1) A sales transaction falls through when Nora, the buyer, doesn't qualify for financing. 2) Buyer Alice decides to join the Peace Corps. She and the seller mutually agree to cancel the sale, and the seller keeps Alice's earnest money. 3) Marcus, the seller, fails to update the Property Condition Disclosure Statement after a plumbing leak caused floor damage in several rooms, so the buyer canceled her offer.
Marcus, the seller, fails to update the Property Condition Disclosure Statement after a plumbing leak caused floor damage in several rooms, so the buyer canceled her offer.
What must you have for a new construction home?
PCDS
Charlene is mentoring Robin as a new licensee at Home Sweet Home Realty in Mississippi. Robin has her first new client meeting with a seller. She has the brokerage agreement, the Informational Statement for Mississippi Property Condition Disclosure Statement, and the listing detail forms. What is she missing?
Property Condition Disclosure Statement
Which one of the following transactions does NOT require the property owner to complete the PCDS in Mississippi? 1) Cathy is purchasing one of the 25 single-family homes in a suburban subdivision. 2) Ronald is buying out his two brothers for a vacation home they purchased together 20 years ago. 3) Norman is downsizing to a condo and selling his five-bedroom home. 4) Arthur and his wife are purchasing a residential home, and they will both be named on the deed.
Ronald is buying out his two brothers for a vacation home they purchased together 20 years ago. - The PCDS is required to be provided for single-family developments with as many as four units, as well as condominiums, townhouses, and manufactured homes that are attached to a permanent foundation.
Broker Anna is representing Charlie, who's selling his home. Charlie asks Anna to complete the PCDS form for him. What should Anna tell Charlie?
She should advise Charlie that he needs to complete the form. The task of completing the PCDS falls squarely in the lap of the seller. An agent must not interpret the property condition on the seller's behalf.
What is the document you have to fill out when PCD is not required?
Statement of Exclusion from Completing the PCDS
what is non-material facts or suspicions are not required disclosures, cannot result in punitive actions against seller or licensee?
Stigmatizing factos
You advise your seller clients that they should disclose certain adverse facts about the property's condition when completing the property condition disclosure statement. You discover a week later, after the purchase agreement is signed by both parties, that the sellers didn't disclose everything they should have. Which of the following is a potential consequence of the sellers' actions in Mississippi?
The buyer has a right to terminate the purchase agreement at any time before closing.
The PCDS accompanies which of the following transaction documents?
The listing drafted by the listing agent - The PCDS is attached to the listing in an effort to provide the potential buyer and cooperating agents with any relevant property details.
Which one of the following is the greatest risk to the seller if the buyer discovers false information on the PCDS?
The seller may be sued for misrepresentation.
Who's responsible for providing a copy of the seller's completed Mississippi Residential Property Condition Disclosure Statement to potential buyers?
The seller's real estate agent
What is the benefit to giving the property condition disclosure before submitting an offer or upon request?
This minimizes the risk of a buyer terminating the contract because the Property Condition Disclosure Statement (PCDS) wasn't issued in a timely manner.
Merlin, a seller in Mississippi, provided Tucker, a buyer, with a blank Property Condition Disclosure Statement. Then his water heater, which had been working perfectly prior to that point, began heating at only very low temperatures. Which of the following is a risk if the disclosure statement isn't amended and issued to Tucker?
Tucker may void the contract without consequences.
What is the Lisle not allowed to do with PCDS?
Under no circumstances may the licensee complete the disclosure on behalf of the seller/developer, or fill in missing information.
Haley is putting together the Wilsons' seller packet for potential buyers who show an interest at the open house on Saturday. She has included the listing, along with the Mississippi Property Condition Disclosure Statement and the Informational Statement for Mississippi Property Condition Disclosure Statement. Has she followed the Mississippi regulations requirements?
Yes, these are all the required documents to provide to buyers. They must be signed by the seller and the licensee prior to submitting an offer.
The PCDS form is an __________ to the listing agreement?
addendum
When is a Property condition disclosure statement required?
for residential real properties that include four or fewer dwellings as well as condominiums, townhouses, and manufactured homes (if they're permanently attached to the land).
How are PCDS delivery allowed?
hand delivery and mail
In Mississippi, the Property Condition Disclosure Statement is attached to the _______ when it's provided to buyers .
listing
If buyer is going to terminate contract due to disclosure statement when must he do that for mail vs hand delivery?
mail = 5 days hand delivery= 3 days
Information about a stigmatized property is not considered _______________, so sellers and licensees don't have to disclose stigmatizing information to potential buyers.
material
How must the PCDS be completed for new constructions?
must be completed from top to bottom without any omissions by the seller or by the developer if the building is new construction.
Can buyers terminate a transaction based on property Stigmatizations?
no
Do any exemptions exist for a PCDS on a new construction home?
no
PCDS is only required when?
seller is assisted by licensee
What must the buyer sign prior to offer acceptance in order to provide information about the disclosure's purpose, purchaser's rights, PCDS legal provisions, and exclusions. The potential buyer must sign it as acknowledgment of receipt.?
the Informational Statement for Mississippi Property Condition Disclosure Statement
is used as an addendum to the listing agreement?
the PCDS form
In a case where the seller is working with multiple agents, who is responsible for delivering the disclosure to the potential buyer?
the agent who received the offer
Who may terminate contract if disclosure statement not received prior to execution of offer?
the buyer - must give notice of termination within 3 days of personal delivery receipt of disclosures and 5 days if mailed
When will the buyer not incur penalties?
when there's a valid reason for voiding the contract,
If the seller doesn't know the answer to a question how can it be marked?
" unknown" or "UNK"
Mark and his wife, Amy, wanted to purchase a new construction home in a subdivision outside Biloxi. Mark asked their agent when they could expect to receive the initial Property Condition Disclosure Statement. What should the agent tell Mark?
"The developer is required to provide the PCDS statement to you before you submit an offer. I can contact him to obtain a copy." - The PCDS contains questions about the property condition, as well as information about provisions included in the transaction.
Examples of transfers resulting from a mortgage default that don't require PCDS?
- Transfer to a beneficiary (named in the deed of trust) -New owner resulting from a foreclosure sale -Deed transfer to the lender
What type of transactions don't require PCDS?
1) Transfers resulting from a court order -Lender-issued writ of execution to seize the property -Foreclosure sale -Estate resolution by probate court or a fiduciary -BankruptcyEminent domain -Transaction party lawsuit 2)Transfers resulting from a mortgage default -Transfer to a beneficiary (named in the deed of trust) -New owner resulting from a foreclosure sale -Deed transfer to the lender 3)Transfer to spouse or other immediate family member 4)Distribution of property from a divorce or separation agreement 5)Co-owner releasing an owned share of the property to one or more owners 6)Transfer of unimproved real property 7) Government is a transaction party, including exercising eminent domain
A PCDS is required for residential real properties that include __________or fewer dwellings as well as condominiums, townhouses, and manufactured homes (if they're permanently attached to the land).
4
Fran is a seller's agent. In which of these Mississippi scenarios is she breaking a federal law?
A potential buyer asks, "Do you know if anyone who lives here has HIV?" Fran answers, "Yes. The current owner's son does." - it's also important to remember that revealing someone's HIV or AIDS status is against federal law.
A licensee responsibility with PCDS?
A prudent licensee will review the disclosure statement after the seller fills it out to ensure all questions are answered, and will discuss with sellers the legal consequences of withholding material facts about the property from prospective buyers. - may advise
According to Mississippi regulations, which one of the following is an example of a valid reason to void a sale offer? 1) The buyer discovered that the seller's granddaughter drowned in the pool in the yard. 2) The buyer's agent discovered that a building permit wasn't approved for an addition. 3) The buyer fired the agent who represented him. 4) The seller updated the original property condition disclosure statement and distributed it to the buyer's agent.
The buyer's agent discovered that a building permit wasn't approved for an addition. When the buyer or the buyer's agent discovers material facts that contradict what's found in the PCDS, the buyer may rightfully void the contract.
What does the Statement of Exclusion from Completing the PCDS need?
is a reference to the property address and the exclusion reason. The form must be signed by the seller, and must include the name of licensee and brokerage.
When is a licensee who is representing the seller required to give the property condition disclosure?
is required to give a copy of the seller's completed disclosure to any prospective buyer (or the buyer's agent, named representative according to the contract, or spouse/co-buyer) prior to the offer being submitted or upon request. This minimizes the risk of a buyer terminating the contract because the Property Condition Disclosure Statement (PCDS) wasn't issued in a timely manner.
Do you need a PCDS for a co-owner releasing an owned share of the property to one or more owners?
no
Do you need a PCDS for a transfer of unimproved real property?
no
Do you need a PCDS to transfer to spouse or other immediate family members?
no
Does the contract void automatically just bc the disclosure determent wasn't delivered within the permitted timeframe?
no
No you need a PCDS when Government is a transaction party, including exercising eminent domain?
no
do you need a PCDS to distribute of property form a divorce or separation agreement?
no
When must the buyer be given the final version of the disclosure?
prior to transferring the title
What must the buyer provide to terminate the contract?
provide written notification to the seller or seller's agent
if the lichees is unsure about whether a client should disclose something, they should?
refer the client to legal counsel
Any nonmaterial facts that are not disclosed do not give the buyer the right to?
resting the offer
Who should should provide a new construction buyer with a copy of the PCDS prior to submitting an offer as well as the final version near the closing. Doing so ensures the buyer has all of the information needed to make an informed decision?
the developer/property owner of a new construction home
What must you do if a change needs to be made to the PCDS?
the seller must attach an amendment to the disclosure statement, provide a copy to the buyer, and sign a written acknowledgment of the amendment.
When a PCDS isn't needed what must be completed?
the seller must complete the Seller's Statement of Exclusion from Completing the PCDS. All that's needed is a reference to the property address and the exclusion reason. The form must be signed by the seller, and must include the name of licensee and brokerage.
is when hosting an open house, the PCDS would be available on the welcome table for buyers to take and review allowed?
yes, A licensee is permitted to provide the PCDS to potential buyers.
