Legislators to consider bill on realtor disclosure

The House Consumer Protection & Business Committee will consider, during an executive session Wednesday, legislation holding real estate sellers accountable for nondisclosure of damages to a buyer.

House Bill 1951 modifies the seller disclosure statement form for real estate transactions and a seller’s responsibility to complete it.

This bill would give power to the buyer so they can make a well-informed decision during a transaction, said Rep. Melanie Morgan, D-Parkland, in a public hearing on the bill Thursday. Failing to disclose damages costs buyers thousands of dollars in repairs they were not expecting, she said.

“With this bill,” Morgan said, “the buyer will be on the same playing field as the seller.”

When purchasing real estate, buyers should receive a seller disclosure statement within five days of signing a written purchase agreement, the bill states. They then have three business days to accept the statement or rescind the agreement.

The form in the bill would include several questions examining the integrity of the home. Sellers would answer based on their “actual knowledge” of the property when filling out the form.

However, sellers could end up facing liability for damages that either they were unaware of when completing the disclosure statement or came up after the sale, said Tara Zerbo, Moses Lake-Othello Association of Realtors president.

She said the bill’s language leaves too much up for interpretation.

For example, a person could sell their home and mark no issues with the property’s foundation after never experiencing any. Still, a few years later, when the buyer discovers something wrong, the seller could then be liable, she said.

Current law maintains a seller is not liable for any error if they had no prior knowledge of it when completing the statement. House Bill 1951 modifies this, so sellers are liable for any error, inaccuracy or omission in a disclosure statement, and removes the wording “actual knowledge.”

The only other option for buyers right now seeking restitution is to file a civil suit against the seller. Still, Morgan said the legal system is inequitable and many people do not know how to navigate it. This bill gives buyers the respect they deserve when making a transaction, she said.

The option to answer “don’t know” when completing the form would be removed with the bill’s passage. Legislators added more questions, including disclosing damages from animals, including urine, feces, chewing, digging, and more.

Zerbo said she disagrees with the idea the document needs modifying and said the Moses Lake-Othello Association of Realtors is in opposition to House Bill 1951.

“People are always trying to change things that don’t necessarily need to be changed,” she said.

There will be some damages sellers simply do not know about, said Washington Realtors lobbyist Bill Clarke during the public hearing. The removal of the “actual knowledge” standard is concerning, he said, testifying in opposition to HB 1951.

“The seller disclosure form is not intended to replace careful due diligence in part of the buyer,” Clarke said.

Annie Fitzsimmons, Washington Realtors attorney, said the exclusion of the standard creates a never-ending loophole of potential liability for the seller. A person will not have complete knowledge about a property built decades ago, she said, and they should not be accountable for this.