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Engrossed Version Senate Bill 433 History

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Key: Green = existing Code. Red = new code to be enacted
ENGROSSED

COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 433

(By Senators Kessler, McCabe, Ross, Mitchell, Hunter, Sharpe and Ball)

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[Originating in the Committee on the Judiciary;

reported February 16, 1999.]

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A BILL to amend chapter thirty-six of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article twelve, relating to the seller's disclosure of known material defects prior to the sale of residential real property; requiring parties to acknowledge disclosure; specifying time for disclosure; creating seller's disclosure form; specifying liability of seller or seller's agent; providing remedies; and providing exemptions.

Be it enacted by the Legislature of West Virginia:
That chapter thirty-six of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article twelve, to read as follows:
ARTICLE 12. SELLER'S DISCLOSURE ACT.
§36-12-1. Short title.
This article may be cited as the "West Virginia Seller's Disclosure Act".
§36-12-2. Application of article.
The provisions of this article apply to transfers of residential real property, improved with dwelling units for one to four families, by sale, exchange, auction, an installment land contract or a lease with an option to buy.
§36-12-3. Definitions.
As used in this article, unless the context clearly requires otherwise:
(1) "Agent" means any individual, partnership, corporation or trustee defined as a "real estate broker", "associate broker" or "real estate salesperson" in section two, article twelve, chapter forty-seven of this code, who acts on behalf of a seller or buyer of residential real property. "Agent" includes a subagent who acts on behalf of an agent;
(2) "Buyer" means any individual, partnership, corporation or trustee purchasing any estate or interest in residential real property;
(3) "Closing" means the occasion when the parties sign and deliver the documents, including the deed, necessary to convey title to the residential real property to the buyer to complete the contract;
(4) "Material defect" means any defect or condition that would tend to substantially and adversely affect either the usefulness or the value of residential real property;
(5) "Offer to purchase" means the oral or written offer by the buyer to the seller to purchase residential real property, including a lease with an option to buy;
(6) "Residential real property" means any estate or interest in a manufactured housing lot or real property improved with dwelling units for one to four families; and
(7) "Seller" means any individual, partnership, corporation or trustee leasing, selling or otherwise transferring an estate or interest in residential real property.
§36-12-4. Required disclosures.
(a) Except for transfers specifically exempted from the provisions of this article, a seller transferring residential real property shall disclose to the buyer all material defects that are known or become known to the seller at the time the property is offered for sale up to the time of the closing. The disclosure shall be in writing on the seller's disclosure form and shall include all material defects with the physical condition and location of the property, including, but not limited to, material defects involving:
(1) Water, sewer and septic systems, including water treatment and sprinkler systems, and the source of household water;
(2) Access to the property;
(3) Structural systems, including the condition of the roof, foundation, basement, rooms, walls and floors;
(4) Plumbing, electrical, heating, air conditioning and wood-burning systems, including fireplaces;
(5) Termites, vermin and other infestations;
(6) Underground storage tanks and hazardous or regulated materials, including asbestos, lead-based paint and radon;
(7) Flooding and damage caused by flooding; and
(8) Water or sewage seepage.
(b) The seller is not required to undertake or provide any independent investigation or inspection of the property in order to make the disclosures required by this article.
§36-12-5. Seller's disclosure form; waiver.

(a) A standard form shall be developed and called the "seller's disclosure form". The form shall include:
(1) A section for the parties to acknowledge that disclosures have been made pursuant to this article;
(2) A list of all material defects to be disclosed pursuant to section four of this article, including space for describing such defects;
(3) Notice to the buyer that he or she may obtain professional advice or inspection of the property;
(4) Notice to the buyer that the seller's written disclosure is the representation of the seller, not the representation of his or her agent; and
(5) Notice to the buyer that the seller's disclosure does not constitute a warranty of any kind by the seller nor does it substitute for an inspection or warranties of title, which the parties may obtain or provide for in their agreement.
(b) The form shall contain a section for the buyer to waive the right to the disclosure as required by this article if the buyer so chooses: Provided, That the waiver is not a term or condition of any agreement between a seller and a buyer, or their agents. The waiver shall be signed by the buyer and shall state as follows: "I have been informed of my right to require the seller to disclose material defects with this residential property pursuant to article twelve, chapter thirty-six of the code of West Virginia, one thousand nine hundred thirty-one, as amended, and I hereby waive my right to receive such disclosure." If a buyer waives his or her right to receive the disclosure, the seller is not obligated to disclose material defects to the buyer as required by this article.
(c) The form shall be developed by the head of the division of consumer protection of the office of the attorney general. Standard forms shall be provided to the clerk of each county commission for distribution no later than the first day of October, one thousand nine hundred ninety-nine. The clerk shall make the forms available to the public for a reasonable reproduction fee.
§36-12-6. Time for disclosure; acknowledgment of disclosure; effective date.

(a) The seller's disclosure form shall be completed by the seller when the seller offers the residential real property for sale.
(b) The seller shall present the form to the buyer prior to the time the buyer offers to purchase the property, unless such disclosure is expressly waived by the buyer as provided for in section five of this article.

(c) The seller shall update and amend the form as necessary to reflect subsequently acquired knowledge of any material defects up to the closing.
(d) The parties shall acknowledge on the form that the seller has disclosed to the buyer all known material defects as required by this article prior to the closing.
(e) This section shall become effective on the first day of November, one thousand nine hundred ninety-nine, at which time all sellers shall make the disclosures required by this article to all buyers.
§36-12-7. No invalidation of transfer.
No transfer of residential real property may be invalidated solely because of the failure of any person to comply with the provisions of this article.
§36-12-8. Remedies.
(a) The seller may be liable in a civil suit for actual damages suffered by the buyer for failure to disclose material defects as required by section four of this article.
(b) The remedy created by subsection (a) of this section is not exclusive and is not intended to abrogate any remedy otherwise available at law.
§36-12-9. Liability of the seller or seller's agent.
(a) A cause of action against a seller or seller's agent does not arise under this article for:
(1) Material defects disclosed to the buyer prior to the buyer's offer to purchase residential real property;
(2) Material defects that develop after the offer to purchase is made but that are disclosed prior to the closing;
(3) Material defects that occur or develop after the closing; or
(4) Material defects known to the buyer before closing.
(b) Notwithstanding any other provision of this code to the contrary, neither a seller nor a seller's agent is liable for any error, inaccuracy or omission in the disclosure required by this article if:
(1) The error, inaccuracy or omission was based on information provided by public agencies and the seller and his or her agent reasonably believed the information to be correct and had no actual knowledge to the contrary; or
(2) The error, inaccuracy or omission was based on information provided in a report or opinion of a licensed engineer, land surveyor, geologist, pest control expert, contractor or other home inspection expert dealing with matters within the scope of his or her expertise and the seller and his or her agent reasonably believed the information to be correct, without actual knowledge to the contrary, having used due care in obtaining the information from the third party and in transmitting it to the buyer.
§36-12-10. Exemptions.
This article does not apply to the following transfers of residential real property:
(1) Transfers by court order including, but not limited to, transfers ordered by a court in administration of an estate, transfers ordered pursuant to a writ of execution, transfers by foreclosure sale, transfers by a trustee in bankruptcy, transfers by eminent domain, transfers pursuant to a condemnation proceeding and transfers resulting from a decree of specific performance or partition;
(2) Transfers to a trustee or other creditor pursuant to a deed of trust or a credit line deed of trust as provided for in sections one-a and fourteen, article one, chapter thirty-eight of this code;
(3) Transfers to a beneficiary of a deed of trust by a trustor or successor in interest who is in default;
(4) Transfers by quitclaim or corrective deed without consideration;
(5) Transfers by a fiduciary administering a decedent's estate, guardianship, conservatorship or trust when a residential property defect disclosure form is provided by a beneficiary with knowledge of the property;
(6) Transfers from one or more coowners solely to one or more other coowners;
(7) Transfers without consideration between family members;
(8) Transfers by will or intestacy;
(9) Transfers by testamentary or inter vivos trust;
(10) Transfers without consideration to charitable or educational associations or trusts and like nonprofit corporations;
(11) Transfers between spouses or former spouses resulting from a decree of divorce, separate maintenance or a property settlement stipulation;
(12) Transfers as a result of the record owner's failure to pay any federal, state or local taxes;
(13) Transfers pursuant to mergers of corporations or transfers by a subsidiary corporation to its parent corporation for no consideration other than the cancellation or surrender of the subsidiary's stock;
(14) Transfer of new dwelling units not previously occupied when the seller warrants that the unit was constructed in accordance with county and municipal building codes in the jurisdiction, or if none are in effect in the jurisdiction, with the state building code; and
(15) Transfers without consideration between a principal and straw party for any purpose.

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(NOTE: The purpose of this bill is to impose a duty on sellers to disclose known defects with their residential property to buyers prior to the closing.

This article is new; therefore, strike-throughs and underscoring have been omitted.)
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