H. B. 2422


(By Delegates Manuel, Collins, Faircloth, Doyle

and Smirl)

[Introduced February 9, 1995; referred to the

Committee on the Judiciary.]




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 eleven, relating to a residential property condition disclosure act; short title; application of article; exemptions; definitions; required disclosures; acknowledgement of receipt; time for disclosure; liability of seller or seller's agent; limitation of actions; no invalidation of transfer; and forms.

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 eleven, to read as follows:
ARTICLE 11. RESIDENTIAL PROPERTY CONDITION DISCLOSURE ACT.
§36-11-1. Short title.
This article may be cited as the West Virginia "Residential Property Condition Disclosure Act."
§36-11-2. Application of article.
The provisions of this article apply to transfers by sale, exchange, installment land contract, lease with an option to purchase or ground lease of a manufactured housing lot or residential real property, improved with dwelling units for one to four families.
§36-11-3. Exemptions.
(a) This article does not apply to the following transfers of residential real property:
(1) Transfers pursuant to a 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 and transfers resulting from a decree of specific performance;
(2) Transfers to a beneficiary of a deed of trust by a trustor or successor in interest who is in default; transfers by a trustee under a deed of trust pursuant to a foreclosure sale, or transfers by a beneficiary under a deed of trust who has acquired the real property at a sale conducted pursuant to a foreclosure sale under a deed of trust or has acquired the real property by a deed in lieu of foreclosure;
(3) Transfers by a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship or trust;
(4) Transfers from one or more coowners solely to one or more other coowners;
(5) Transfers made solely to any combination of a spouse or a person or persons in the lineal line of consanguinity of one or more of the transferors;
(6) Transfers between spouses resulting from a decree of divorce or a property settlement stipulation pursuant to the provisions of article two, chapter forty-eight of this code;
(7) Transfers made by virtue of the record owner's failure to pay any federal, state or local taxes; and
(8) Transfers to or from any governmental entity or public or quasi-public housing authority or agency.
(b) Notwithstanding any other provision of this code to the contrary, the builder of a new dwelling shall disclose in writing to the purchaser thereof all known material defects which would constitute a violation of any applicable building code. The disclosure required by this subsection shall be made by a builder: (1) When selling a completed dwelling, before acceptance of the purchase contract; or (2) when selling a dwelling before or during its construction, after issuance of a certificate of occupancy. This disclosure does not abrogate any warranty or any other contractual obligations the builder may have to the purchaser. The disclosure required by this subsection shall be made on the disclosure form described in section ten of this article. If no defects are known by the builder to exist, the builder shall so state on the disclosure form required by this subsection.
§36-11-4. 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;
(2) "Buyer" means any individual, partnership, corporation or trustee purchasing any estate or interest in real property; (3) "Final settlement" means the time at which the parties have signed and delivered all papers and consideration to convey title to the estate or interest in the residential real property being conveyed;
(4) "Material defect" means any defect or condition that would tend to unreasonably and adversely affect either the usefulness or the value of residential real property.
(5) "Residential real property" means any estate or interest in a manufactured housing lot or real property, improved by dwelling units for one to four families;
(6) "Seller" means any individual, partnership, corporation or trustee leasing, selling, or otherwise transferring any estate or interest in residential real property;
(7) "Subagent" means any individual, partnership, corporation or trustee who acts on behalf of an agent;
§36-11-5. Required disclosures; acknowledgement of receipt.
(a) Except for transfers specifically excluded from the provisions of this article, a seller transferring residential real property shall disclose, in writing on forms as prescribed under the provisions of section ten of this article, to a buyer, agent and subagent, as appropriate:
(1) All material defects of that property that are known to him or her at the time the property is offered for sale or that are known prior to the time of final settlement;
(2) All other items which are required to be disclosed relative to the physical condition of the property including, but not limited to:
(A) The water and sewer systems, including the source of household water, water treatment system and sprinkler system;
(B) Insulation;
(C) Structural systems, including roof, walls, floors, foundation and basement, if any;
(D) Plumbing, electrical, heating and air conditioning systems;
(E) Wood-destroying insect or other infestations;
(F) Land use or zoning matters;
(G) Hazardous or regulated materials, including asbestos, lead-based paint, radon and underground storage tanks; and
(H) Any other material condition or defect known to the seller.
(b) The disclosure form shall contain a notice to prospective buyers that he or she may wish to obtain professional advice or inspections of the property. The notice shall state that the information contained in the disclosure is the representation of the seller and is not the representation of an agent or salesperson, if any. The notice shall further state that the seller's representations are for disclosure purposes only and do not constitute a warranty of any kind by the seller nor do they substitute for any inspections or warranties, which the parties, or either of them, may wish to obtain or provide for in any agreement between them. The seller shall not be required to undertake or provide any independent investigation or inspection of the property in order to make the disclosures required by this article.
(c) A buyer shall acknowledge receipt of the disclosure statement required by this article, in writing upon receipt, on a form as may be prescribed pursuant to section ten of this article.
§36-11-6. Time for disclosure.
The disclosures required to be made by this article shall be made in writing before the seller signs a listing agreement, if any, and shall be updated or amended as necessary to reflect knowledge subsequently acquired by the seller or agent or any material changes occurring in the property before the time of final settlement: Provided, That in all cases, a seller shall provide to a buyer, agent and subagent, as appropriate, the disclosures required by this article, before any acceptance by the buyer of an offer.
§36-11-7. Liability of the seller or seller's agent.
(a) The provisions of this article do not give rise to a cause of action against a seller or a seller's agent or subagent for:
(1) Material defects in the condition of the residential property which are disclosed to the buyer prior to the buyer's making an offer to purchase;
(2) Material defects which may develop after the offer to purchase is made but which are disclosed before the time of final settlement: Provided, That the seller has complied with the agreement of sale; or
(3) Material defects which occur or develop after the final settlement.
(b) Notwithstanding any other provision of this code to the contrary, neither a seller nor a seller's agent is liable under this article for any error, inaccuracy or omission of any information required by this article to be disclosed if: (1) The error, inaccuracy or omission was based on information provided by public agencies and the seller and any agent of the seller reasonably believed the information to be correct and had no actual knowledge to the contrary; or (2) the error, inaccuracy or omission was based upon 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 license or expertise, and the seller and any agent of the seller reasonably believed the information to be correct, had no actual knowledge to the contrary and used due care in obtaining the information from the third party and in transmitting it to the buyer.
§36-11-8. Limitation of actions.
Notwithstanding any other provision of this code to the contrary, in no event may an action based on the breach of any duty imposed by this article be commenced more than one year from the date of occupancy by the buyer or recordation of the transfer, whichever occurs first.
§36-11-9. 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.
§36-11-10. Property condition and material defect report forms

and acknowledgement of receipt forms.

The West Virginia real estate commission shall develop a standard form to be used as the "disclosure of residential real property condition and material defects report form" and a form acknowledging receipt of same. These forms shall provide for the disclosure of all information required by the provisions of this article and shall be made available to the public no later than the first day of July, one thousand nine hundred ninety-five.



NOTE: The purpose of this bill is to impose a duty on sellers and lessors of certain residential real estate to disclose material defects and conditions to prospective buyers or lessees.

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