01-12-2005 Council Agenda - Laserfiche WebLink

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MINNESOTA STATE BAR ASSOCIATION REAL PROPERTY COUNCIL RESIDENTIAL REAL ESTATE COMMITTEE Revised, November 15, 20114 M.S.B.A. Real Property Form No. 15, CONDITION OF THE PROPERTY Minnesota Statutes sections 513.52 — .60 went into effect on January 1, 2003, requiring the seller to make a written disclosure to a prospective buyer before signing a purchase agreement for residential property. "The disclosure must include all material facts pertaining to adverse physical conditions in the property of which the seller is aware that could adversely and significantly affect: (1) an ordinary buyer's use and enjoyment of the property; or (2) any intended use of the property of which the seller is aware." This law has been referred to as the "Seller Disclosure Law." It is actually broader than "Seller Disclosure." The statute allows compliance with the law in three ways: seller disclosure; inspection by a qualified third party; or, waiver of the disclosure. The statute is generally concerned with informing the buyer about the condition of the property or at least alerting the buyer that the condition of the property is an important concern for the buyer. The 2004 Legislature changed the disclosure requirement to read: "The disclosure must include all material facts of which the seller is aware that could adversely and significantly affect: (1) an ordinary buyer's use and enjoyment of the property; or (2) any intended use of the property of which the seller is aware." This is a much broader disclosure requirement than the 2003 version of the law. Real Property Form No. 15 to addresses three goals: 1. Create a form that guides the seller through compliance with the statute. 2. Create a form that is useable as a "stand alone" form that might be used with any purchase agreement and that addresses all three options in the statute (disclosure, inspection or waiver). 3. If seller disclosure is the compliance option selected by seller, then to provide guidance to practitioners and consumers (by providing a list of questions and items to help the seller recall, remember, or otherwise consider all of the "physical condition" issues concerning the property.) The statute does not require any particular form. There are numerous opinions on the Committee and the Council as to exactly what is required to make a proper disclosure (if disclosure is the option selected). Practitioners are advised to read the statute carefully and make their own judgments about this form. Compliance with the statute can be done in any form that fulfills the statute. When using this form to comply with the statute, it is intended to be used in three logical and separable parts: Pages 1 -2. These pages will he used in all residential real estate transactions to which the statute applies. Minn. Stat. §513.52, Subd. 4, and §513.55, Subd. 1. (A member of the Legislative Committee reported to the Council that the legislative intent was to exclude vacant residential lots from the purview of the statute.) Note on Page 2 that if inspection or waiver is selected, Pages 3 -8 may be discarded. (Caveat: This statute is not intended to supplant any common law disclosure requirements. Minn. Stat. §513.57, Subd. 3. An argument can be made that common law disclosure is required even if inspection or waiver is selected under the statute.) Pages 1 -3 and 8. If the seller elects to provide a disclosure, and if the practitioner is confident that the seller- client is capable of making a complete disclosure without the aid of a detailed list of questions, Pages 3 and 8 could be used as the forms for seller's disclosure. Part A on Page 3 could contain the seller's disclosure. An alternative use of Part A was suggested at the Council meeting: seller could write in, "See my responses in Parts B -E." Pages 1 through 8. For a checklist form of disclosure, Pages 3 through 8 could be used as the form for the disclosure. R.P.F. No. 15 begins on the next page. This page is not part of the form. This form was designed for 14 inch, legal length paper. Make sure that your Adobe software is set to print on 14 inch paper. - 2 0 -