Many years ago the WA State legislature passed a law that requires all sellers of any real estate to complete a standardized Property Disclosure Statement. There are three versions of this disclosure statement; Commercial property (of any type), Unimproved property (raw land), Improved property (residential). The six page versions for unimproved and improved property, include questions about title and authority to sell, easements, boundary disputes, water, sewer, structure, systems and fixtures, Home Owner Associations, environmental issues, lead paint, manufactured home issues, and finally a promise or verification by the seller that they have been completely honest. In other words, the seller is supposed to fully disclose any known material defects of the property! Such disclosure does NOT relieve the buyer of their duty to investigate the property!
The seller has four choices for answers to each specific question; Yes, No, Don’t Know, or Not Applicable. Since the law says that the buyer has a three day window to walk away from a transaction after receiving a fully COMPLETED disclosure, it is important that sellers complete each and every question even if the answer is “I don’t know” or “not applicable”. Without a fully completed form, the 3 day clock never starts ticking.
Lenders usually ask buyers to waive receipt of the disclosure since they don’t want the liability of answering questions because they lack firsthand knowledge of the foreclosed property. Since the statute says the environmental portion CANNOT be waived, sellers who don’t complete even that portion, take the risk that the buyer can walk away anytime up to closing. In other words if you have not received a completed version of a disclosure statement, you have a “get out of jail (the offer)free card!”
The one and only exception is in the case of an estate sale. Estate’s are exempt and have no obligation to complete the Seller Disclosure Statement. In such cases, buyers are not entitled to the “get out of jail free” option. Some sellers have mistakenly tried to use this loophole when the parents are deceased, even though the property has technically passed to the heirs already. The best example of this is when the property is held by an LLC (Limited Liability Company) or Trust and partners or parents are deceased. In these cases, the property has changed hands and is NOT an estate therefore the Seller Disclosure Statement must be completed even if the partners or trustees have limited knowledge of the property.