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THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

1999

No. 1032 Session of

 

 

INTRODUCED BY GREENLEAF, LOEPER, MELLOW, HART, SALVATORE, O'PAKE, FUMO, BELL, BOSCOLA, BRIGHTBILL, CONTI, CORMAN, KUKOVICH, SCHWARTZ, THOMPSON, WENGER, WOZNIAK, LEMMOND AND MOWERY, JUNE 18, 1999

 

 

SENATOR TILGHMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, SEPTEMBER 26, 2000

 

 

 

AN ACT

 

1 Amending Title 68 (Real and Personal Property) of the

2 Pennsylvania Consolidated Statutes, relating to residential

3 real estate transfers; providing for disclosures by sellers

4 of residential real estate and for home inspections; and

5 making a repeal.

 

6 The General Assembly of the Commonwealth of Pennsylvania

 

7 hereby enacts as follows:

 

8 Section 1. Title 68 of the Pennsylvania Consolidated

 

9 Statutes is amended by adding a part to read:

 

10 PART III

 

11 RESIDENTIAL REAL PROPERTY

 

12 Chapter

 

13 71. General Provisions

 

14 73. Seller Disclosures

 

15 75. Home Inspections

 

16 CHAPTER 71

 

17 GENERAL PROVISIONS

 

18 Sec.


 

4 § 7101. Short title of part.

 

5 This part shall be known and may be cited as the Residential

 

6 Real Estate Transfers Law.

 

7 § 7102. Definitions.

 

8 Subject to additional definitions contained in subsequent

 

9 provisions of this part which are applicable to specific

 

10 provisions of this part, the following words and phrases when

 

11 used in this part shall have the meanings given to them in this

 

12 section unless the context clearly indicates otherwise:

 

13 "Agent." Any broker, associate broker or salesperson, as

 

14 defined in the act of February 19, 1980 (P.L.15, No.9), known as

 

15 the Real Estate Licensing and Registration Act.

 

16 "Agreement of transfer." A contract between a buyer and

 

17 seller setting forth the terms of a residential real estate

 

18 transfer.

 

19 "Buyer." Any person receiving any estate or interest in real

 

20 property in a transfer subject to this part.

 

21 "Commission." The State Real Estate Commission.

 

22 "Final settlement." The time at which the buyer and seller


 

4 residential real property in a transfer subject to this part.

 

5 § 7103. Application of part.

 

6 (a) General rule.--This part shall apply to and the term

 

7 "residential real estate transfer" when used in this part shall

 

8 mean a transfer of any interest in real property located within

 

9 this Commonwealth, other than a transfer described in subsection

 

10 (b), that consists of not less than one nor more than four

 

11 residential dwelling units, whether by sale, exchange,

 

12 installment sales contract, lease with an option to purchase,

 

13 grant or transfer of unit in a residential condominium or

 

14 cooperative.

 

15 (b) Exceptions.--This part shall not apply to a transfer:

 

16 (1) Pursuant to court order, including, but not limited

 

17 to, transfers ordered by a probate court in the

 

18 administration of an estate, transfers pursuant to a writ of

 

19 execution, transfers by a trustee in bankruptcy, transfers by

 

20 eminent domain and condemnation and transfers resulting from

 

21 a decree for specific performance.

 

22 (2) To a mortgagee by a mortgagor or successor in


 

9 (5) Between spouses resulting from a decree of

 

10 dissolution of marriage or a decree of legal separation or

 

11 from a property settlement agreement incidental to the

 

12 decree.

 

13 (6) By a corporation, partnership or other association

 

14 to its shareholders, partners or other equity owners in

 

15 connection with the liquidation of the corporation,

 

16 partnership or other association.

 

17 (7) Of a property to be converted by the buyer into a

 

18 use other than residential use or to be demolished.

 

19 (8) Of unimproved real property.

 

20 CHAPTER 73

 

21 SELLER DISCLOSURES

 

22 Sec.


 

9 § 7301. Short title of chapter.

 

10 This chapter shall be known and may be cited as the Real

 

11 Estate Seller Disclosure Law.

 

12 § 7302. Application of chapter.

 

13 (a) General rule.--This chapter shall apply to all

 

14 residential real estate transfers, except the following:

 

15 (1) Transfers by a fiduciary in the course of the

 

16 administration of a decedent's estate, guardianship,

 

17 conservatorship or trust.

 

18 (2) Transfers of new residential construction that has

 

19 not been previously occupied when:

 

20 (i) the buyer has received a one-year or longer

 

21 written warranty covering such construction;

 

22 (ii) the dwelling has been inspected for compliance


 

9 common elements in a condominium, and section 4409 (relating to

 

10 resales of cooperative interests) shall control disclosures a

 

11 seller is required to make concerning common elements in a

 

12 cooperative.

 

13 § 7303. Disclosure of material defects.

 

14 Any seller who intends to transfer any interest in real

 

15 property shall disclose to the buyer any material defects with

 

16 the property known to the seller by completing all applicable

 

17 items in a property disclosure statement which satisfies the

 

18 requirements of section 7304 (relating to disclosure form). A

 

19 signed and dated copy of the property disclosure statement shall

 

20 be delivered to the buyer in accordance with section 7305

 

21 (relating to delivery of disclosure form) prior to the signing

 

22 of an agreement of transfer by the seller and buyer with respect

 

23 to the property.


 

9

(2)

When the property was last occupied by the seller.

10

(3)

Roof.

11

(4)

Basements and crawl spaces.

12

(5)

Termites/wood destroying insects, dry rot and pests.

13

(6)

Structural problems.

14

(7)

Additions, remodeling and structural changes to the

 

15 property.

 

16 (8) Water and sewage systems or service.

 

17 (9) Plumbing system.

 

18 (10) Heating and air conditioning.

 

19 (11) Electrical system.

 

20 (12) Other equipment and appliances included in the

 

21 sale.

 

22 (13) Soils, drainage and boundaries.

 

23 (14) Presence of hazardous substances.

 

24 (15) Condominiums and other homeowners associations.


 

9 deemed delivery to all persons intending to take title as co-

 

10 tenants, joint tenants or as a tenant by the entireties with the

 

11 buyer. Receipt may be acknowledged on the statement, in an

 

12 agreement of transfer for the residential real property or shown

 

13 in any other verifiable manner.

 

14 § 7306. Information unavailable to seller.

 

15 If at the time the disclosures are required to be made, an

 

16 item of information required to be disclosed is unknown or not

 

17 available to the seller, the seller may make a disclosure based

 

18 on the best information available to the seller.

 

19 § 7307. Information subsequently rendered inaccurate.

 

20 If information disclosed in accordance with this chapter is

 

21 subsequently rendered inaccurate prior to final settlement as a

 

22 result of any act, occurrence or agreement subsequent to the

 

23 delivery of the required disclosures, the seller shall notify

 

24 the buyer of the inaccuracy.

 

25 § 7308. Affirmative duty of seller.


 

9 (2) the error, inaccuracy or omission was based on a

 

10 reasonable belief that a material defect or other matter not

 

11 disclosed had been corrected; or

 

12 (3) the error, inaccuracy or omission was based on

 

13 information provided by a public agency, home inspector,

 

14 contractor or person registered or licensed under an act

 

15 referred to in section 7503(a) (relating to relationship to

 

16 other laws) about matters within the scope of the agency's

 

17 jurisdiction or such other person's occupation and the seller

 

18 had no knowledge of the error, inaccuracy or omission.

 

19 (b) Delivery of information by public agency.--The delivery

 

20 of any information required to be disclosed by this chapter to a

 

21 prospective buyer by a public agency or other person providing

 

22 information required to be disclosed under this chapter shall be

 

23 deemed to comply with the requirements of this chapter and shall

 

24 relieve the seller or the agent of the seller from any further


 

9 § 7311. Failure to comply.

 

10 (a) General rule.--A residential real estate transfer

 

11 subject to this chapter shall not be invalidated solely because

 

12 of the failure of any person to comply with any provision of

 

13 this chapter. However, any person who willfully or negligently

 

14 violates or fails to perform any duty prescribed by any

 

15 provision of this chapter shall be liable in the amount of

 

16 actual damages suffered by the buyer as a result of a violation

 

17 of this chapter. This subsection shall not be construed so as to

 

18 restrict or expand the authority of a court to impose punitive

 

19 damages or apply other remedies applicable under any other

 

20 provision of law.

 

21 (b) Statute of limitations.--An action for damages as a

 

22 result of a violation of this chapter must be commenced within

 

23 two years after the date of final settlement.

 

24 § 7312. Amendment of disclosure.


 

8 under the act of February 19, 1980 (P.L.15, No.9), known as the

 

9 Real Estate Licensing and Registration Act.

 

10 (c) Duty to provide form.--An agent representing a seller

 

11 must advise a seller of the seller's responsibilities under this

 

12 chapter and must provide the seller with a copy of the form of

 

13 property disclosure statement.

 

14 § 7314. Cause of action.

 

15 A buyer shall not have a cause of action under this chapter

 

16 against the seller or the agent for either or both of the seller

 

17 or the buyer for:

 

18 (1) material defects to the property disclosed to the

 

19 buyer prior to the signing of an agreement of transfer by the

 

20 seller and buyer;

 

21 (2) material defects that develop after the signing of

 

22 the agreement of transfer by the seller and buyer; or


 

7 except that the municipality or local authority shall not have

 

8 the power after that date to amend the ordinance or regulation

 

9 in a manner that:

 

10 (1) imposes new or expanded disclosure requirements;

 

11 (2) increases the scope of any provision that must be

 

12 included in an agreement of transfer; or

 

13 (3) imposes new requirements on any agent, buyer or

 

14 seller involved in a residential real estate transfer.

 

15 CHAPTER 75

 

16 HOME INSPECTIONS

 

17 Sec.

 

18 7501. Short title of chapter.

 

19 7502. Definitions and index of definitions.

 

20 7503. Relationship to other laws.

 

21 7504. Duty of care of home inspectors.

 

22 7505. Consumer remedies.


 

7 section unless the context clearly indicates otherwise:

 

8 "Home inspection." A noninvasive, visual examination of some

 

9 combination of the mechanical, electrical or plumbing systems or

 

10 the structural and essential components of a residential

 

11 dwelling designed to identify material defects in those systems

 

12 and components, and performed for a fee in connection with or

 

13 preparation for a proposed or possible residential real estate

 

14 transfer. The term also includes any consultation regarding the

 

15 property that is represented to be a home inspection or that is

 

16 described by any confusingly similar term. The term does not

 

17 include an examination of a single system or component of a

 

18 residential dwelling such as, for example, its electrical or

 

19 plumbing system or its roof. The term also does not include an

 

20 examination that is limited to inspection for, or of, one or

 

21 more of the following: wood destroying insects, underground

 

22 tanks and wells, septic systems, swimming pools and spas, alarm


 

7 100 HOME INSPECTIONS AND has passed a recognized or

 

8 accredited examination testing knowledge of the proper

 

9 procedures for conducting a home inspection.

 

10 (4) Requires that its members comply with a code of

 

11 conduct and attend continuing professional education classes

 

12 as an ongoing condition of membership.

 

13 (b) Index of other definitions.--The following is a

 

14 nonexclusive list of other definitions applying to this chapter

 

15 and the sections in which they appear:

 

16 "Agent." Section 7102 (relating to definitions).

 

17 "Agreement of transfer." Section 7102 (relating to

 

18 definitions).

 

19 "Buyer." Section 7102 (relating to definitions).

 

20 "Material defect." Section 7102 (relating to definitions).

 

21 "Residential real estate transfer." Section 7103 (relating

 

22 to application of part).

 

23 "Seller." Section 7102 (relating to definitions).


 

6 (4) The act of December 14, 1982 (P.L.1227, No.281),

 

7 known as the Architects Licensure Law.

 

8 (5) The act of July 9, 1987 (P.L.238, No.43), known as

 

9 the Radon Certification Act.

 

10 (6) The act of July 10, 1990 (P.L.404, No.98), known as

 

11 the Real Estate Appraisers Certification Act.

 

12 (b) Exclusions.--This chapter shall not:

 

13 (1) Apply to a person registered or licensed under an

 

14 act referred to in subsection (a) when acting pursuant to his

 

15 registration or license.

 

16 (2) Apply to an officer or employee of a municipality or

 

17 local authority when acting in his official capacity.

 

18 (3) Affect the obligations or immunities of a person

 

19 licensed under the act of February 19, 1980 (P.L.15, No.9),

 

20 known as the Real Estate Licensing and Registration Act, that

 

21 are imposed or provided by that act or Chapter 73 (relating

 

22 to seller disclosures) when the person is acting pursuant to

 

23 his license.


 

5 national home inspector associations.

 

6 § 7505. Consumer remedies.

 

7 (a) General rule.--The performance of a home inspection is a

 

8 service that is subject to the act of December 17, 1968

 

9 (P.L.1224, No.387), known as the Unfair Trade Practices and

 

10 Consumer Protection Law.

 

11 (b) Prohibited acts.--Any of the following acts engaged in

 

12 by a home inspector, an employer of a home inspector or another

 

13 business or person that controls or has a financial interest in

 

14 the employer of a home inspector shall be deemed to be an unfair

 

15 or deceptive act or practice as defined by section 2(4)(i)

 

16 through (xxi) of the Unfair Trade Practices and Consumer

 

17 Protection Law:

 

18 (1) Performing or offering to perform for an additional

 

19 fee any repairs to a structure with respect to which the home

 

20 inspector, the employer of the home inspector or such other

 

21 business or person has prepared a home inspection report

 

22 within the preceding 12 months, except that this paragraph

 

23 shall not apply to remediation for radon or wood destroying


 

4 (3) Offering or delivering any commission, referral fee

 

5 or kickback to the seller of the inspected property or to an

 

6 agent for either or both of the seller and the buyer for the

 

7 referral of any business to the home inspector, the employer

 

8 of the home inspector or such other business or person.

 

9 (4) Accepting an engagement to perform a home inspection

 

10 or to prepare a home inspection report in which the

 

11 employment itself or the fee payable for the inspection is

 

12 contingent upon the conclusions in the report, preestablished

 

13 or prescribed findings or the closing of the transaction.

 

14 (c) Exception.--A home warranty company that is affiliated

 

15 with or retains the home inspector does not violate subsection

 

16 (b) if the home warranty company performs repairs pursuant to

 

17 claims made under a home warranty contract.

 

18 (d) Remedies.--In addition to any other remedies available

 

19 under the Unfair Trade Practices and Consumer Protection Law or

 

20 other applicable provision of law, the owner of a property on

 

21 which repairs are performed in violation of subsection (b)(1)

 

22 shall be entitled to a full refund of any moneys paid for those

 

23 repairs and any promissory note or other obligation to pay given

 

24 to the person performing those repairs shall be void.


 

3 national home inspection association in accordance with the

 

4 ethical standards and code of conduct or practice of that

 

5 association. A home inspection performed by a person who has not

 

6 attained full membership in a national home inspection

 

7 association satisfies the requirements of this subsection <

 

8 SECTION if the person is supervised by a full member in good <

 

9 standing of a national home inspection association who agrees to

 

10 be responsible for the home inspection report by signing the

 

11 report.

 

12 (b) Reliance.--A buyer shall be entitled to rely in good <

 

13 faith, without independent investigation, on a written

 

14 representation by a home inspector that the home inspector is a

 

15 full member in good standing of a national home inspection

 

16 association.

 

17 § 7507. Contracts with home inspectors.

 

18 (a) Prohibited provisions.--The following types of

 

19 provisions in a contract with a home inspector for the

 

20 performance of a home inspection are contrary to public policy

 

21 and shall be void:

 

22 (1) a limitation on the liability of the home inspector

 

23 for gross negligence or willful misconduct;

 

24 (2) a waiver or modification of any provision of this


 

2 writing and shall include:

 

3 (1) A description of the scope of the inspection,

 

4 including without limitation an identification of the

 

5 structural elements, systems and subsystems covered by the

 

6 report.

 

7 (2) A description of any material defects noted during

 

8 the inspection, along with any recommendation that certain

 

9 experts be retained to determine the extent of the defects

 

10 and any corrective action that should be taken. A "material

 

11 defect" as defined in section 7102 (relating to definitions)

 

12 that poses an unreasonable risk to people on the property

 

13 shall be conspicuously identified as such.

 

14 (3) The following statements, set forth conspicuously:

 

15 "A home inspection is intended to assist in

 

16 evaluation of the overall condition of the dwelling. The

 

17 inspection is based on observation of the visible and

 

18 apparent condition of the structure and its components on

 

19 the date of inspection."

 

20 "The results of this home inspection are not intended

 

21 to make any representation regarding the presence or

 

22 absence of latent or concealed defects that are not

 

23 reasonably ascertainable in a competently performed home

 

24 inspection. No warranty or guaranty is expressed or


1 professional opinion as to any defects or concerns

 

2 mentioned in the report."

 

3 "This home inspection report is not to be construed

 

4 as an appraisal and may not be used as such for any

 

5 purpose."

 

6 (b) Confidentiality.--Except as otherwise required by law, a

 

7 home inspector shall not deliver a home inspection report to any

 

8 person other than the client of the home inspector without the

 

9 client's consent. The seller shall have the right, upon request,

 

10 to receive without charge a copy of a home inspection report

 

11 from the person for whom it was prepared.

 

12 (c) Repair estimates prohibited.--A home inspector shall not

 

13 express either orally or in writing an estimate of the cost to

 

14 repair any defect found during a home inspection, except that

 

15 such an estimate may be included in a home inspection report if:

 

16 (1) the report identifies the source of the estimate;

 

17 (2) the estimate is stated as a range of costs; and

 

18 (3) the report states that the parties should consider

 

19 obtaining an estimate from a contractor who performs the type

 

20 of repair involved.

 

21 § 7509. Liability insurance.

 

22 (a) Required insurance.--A home inspector shall maintain

 

23 insurance against errors and omissions in the performance of a

 

24 home inspection and general liability, with coverages of not


1 home inspector delivers.

 

2 (2) Paragraph (1) shall not apply to a home inspection

 

3 report that was delivered prior to (the Legislative Reference <

 

4 Bureau shall insert here the effective date of this act). THE <

 

5 EFFECTIVE DATE OF THIS SECTION.

 

6 § 7510. RELIANCE BY BUYER.

 

7 A BUYER SHALL BE ENTITLED TO RELY IN GOOD FAITH, WITHOUT

 

8 INDEPENDENT INVESTIGATION, ON A WRITTEN REPRESENTATION BY A HOME

 

9 INSPECTOR THAT THE HOME INSPECTOR IS A FULL MEMBER IN GOOD

 

10 STANDING OF A NATIONAL HOME INSPECTION ASSOCIATION.

 

11 § 7510. § 7511. Penalties. <

 

12 (a) Criminal penalty.--A person who violates section 7509

 

13 (relating to liability insurance) or who provides a false

 

14 representation under section 7506(b) (relating to contractual <

 

15 provisions regarding home inspections) 7510 (RELATING TO <

 

16 RELIANCE BY BUYER) commits a summary offense and upon conviction

 

17 thereof for a first offense shall be sentenced to pay a fine not

 

18 exceeding $500 or to imprisonment for not more than three

 

19 months, or both, and for a second or subsequent offense commits

 

20 a felony MISDEMEANOR of the third degree and upon conviction <

 

21 thereof shall be sentenced to pay a fine of not less than $2,000

 

22 but not more than $5,000 or to imprisonment for not less than

 

23 one year but not more than two years, or both.

 

24 (b) Fine.--A person who violates any provision of section

 

25 7508 (relating to home inspection reports) shall, upon


1 An action to recover damages arising from a home inspection

 

2 report must be commenced within one year after the date the

 

3 report is delivered.

 

4 Section 2. The act of July 2, 1996 (P.L.500, No.84), known

 

5 as the Real Estate Seller Disclosure Act, is repealed.

 

6 Section 3. This act shall take effect in one year.