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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