Chapter 25, Title 6 of the Delaware Code, requires a Seller of residential property to disclose in writing all material defects of the property that are known at the time the property is offered for sale or that are known prior to the time of final settlement. Residential property means any interest in a property or manufactured housing lot, improved by dwelling units for 1-4 families. The disclosure must be made on this Report, which has been approved by the Delaware Real Estate Commission, and shall be updated as necessary for any material changes occurring in the property before final settlement. This Report shall be given to all prospective Buyers prior to the time the Buyer makes an offer to purchase. This Report, signed by Buyer and Seller, shall become a part of the Agreement of Sale. This Report is a good faith effort by the Seller to make the disclosures required by Delaware law and is not a warranty of any kind by the Seller or any Agents or Sub-Agents representing Seller or Buyer in the transfer and is not a substitute for any inspections or warranties that the Seller or Buyer may wish to obtain. The Buyer has no cause of action against the Seller or Real Estate Agent for material defects in the property disclosed to the Buyer prior to the Buyer making an offer; material defects developed after the offer was made but disclosed in an update of this Report prior to settlement, provided Seller has complied with the Agreement of Sale; or material defects which occur after settlement. State websites containing helpful information include: Office of State Planning Coordination www.stateplanning.delaware.gov, Delaware Department of Natural Resources and Environmental Control www.dnrec.delaware.gov, Delaware Division of Public Health www.dhss.delaware.gov/dhss/dph, Delaware State Police Sex Offender Registry www.state.de.us/dsp and other agencies listed on www.delaware.gov.

The SELLER'S DISCLOSURE OF REAL PROPERTY CONDITION REPORT shall not apply to the following transfers of residential real property. Chapter 25, Title 6, §2577.

1. Transfers by a fiduciary in the course of the administration of the decedent's estate, guardianship or trust.


2. Transfers pursuant to court order such as transfers ordered by the Court of Chancery in the administration of an estate, trust or guardianship or pursuant to a Writ of Execution, by a trustee in bankruptcy or a receiver, by eminent domain, and transfers resulting from a decree for specific performance.


3. Transfers to a mortgagee by a mortgagor in default by a deed in lieu of foreclosure.


4. Transfers by any sheriff's sale for default on an obligation secured by a mortgage, judgment, tax or other lien.


5. Transfers from one co-owner to one or more other co-owners.


6. Transfers made to a spouse or to a person or persons in the lineal line of consanguinity of one or more of the transferors.


7. Transfers between spouses resulting from a property settlement incident to a divorce.


8. Transfers to or from any government entity.

In view of our current economic environment with short sales and foreclosures, I thought it would be good to cite the law regarding Seller's Disclosure, and then cite the Exemptions to that law. Both of these forms can be found on our MLS under Standard Forms.

I monitored Andy Taylor's class on Legislative Update at the DAR Convention and he pointed out a few things that I think we should know with regard to the above. In a short sale, the Seller still has to fill out a Seller's Disclosure because he is still the owner of the property. However, if a Seller gives his mortgage company a Deed in lieu of foreclosure (in other words conveying the property to the mortgage company), the Seller does not need to fill out a Seller's Disclosure for the mortgage company. (See #3 above) Once the mortgage company or bank becomes the owner and puts the property up for sale, the Bank is now required to complete the Seller's Disclosure. Likewise, if you buy a property at Sheriff's Sale, the Sheriff does not have to fill out a Seller's Disclosure. (See #4 above)

Another interesting perspective that Andy shared with us was that if a parent dies and leaves the property directly to the children, the children should fill out a Seller's Disclosure. However, if the property is left to the "estate", perhaps along with other assets, and an Executor or Administrator is going to sell off all the assets and divide the proceeds among the children, then the Executor or Administrator does not need to fill out a Seller's Disclosure. (See #1 above)

If in doubt as to whether your Seller needs to fill out a Seller's Disclosure, my recommendation is that you call a local attorney and seek legal advice. Better safe than sorry!

See you next week!
Ronnie REALTOR^®

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