Years ago, home sellers in New York were not required to disclose defects in the property being sold. In legal terms, the doctrine was "caveat emptor" -- or "let the buyer beware." That meant it was up to the buyer to inspect the property for any defects.
But in 2002, the law changed in New York, and now the home seller is required to disclose any known defects in the property, or else pay a $500 credit to the buyer at closing. If you are planning to sell a home, it's important to know which option is best for your specific situation, and it's important to have legal guidance in these matters because there are potential pitfalls that could cost you a lot of money.
As a seller, should I complete the disclosure statement or pay the $500 credit?
Every situation is different, but a basic rule should be to consult with a real estate lawyer to minimize your risk of liability.
Even if a seller pays the $500 credit instead of completing the disclosure form, the seller could still be liable for a defect if the buyer successfully claims that the seller actively concealed the defect.
On the other hand, opting to pay the $500 credit could help a seller minimize potential liability by avoiding any possible misstatements on the disclosure form. A misstatement on the form could expose the seller to liability and prove very costly.
In short, if you're selling a home or buying a home, talk to a New York real estate attorney about your options -- and about drafting a buy-sell agreement that protects your interests.