OKLAHOMA HAS NEW LAW ON DISCLOSING THE CONDITION OF RESIDENTIAL PROPERTY

Purchasing a home is one of the most important and largest investments the average person will make, and is also where most of one's time will be spent. Formerly, the customary standard of caveat emptor--or buyer beware--prevailed in the state of Oklahoma. In other words, unless the buyer asked specific questions about defects, the seller was generally not required to disclose the defects even if he or she had specific knowledge that one or more substantial defects exist.

However, in 1994 the Oklahoma legislature passed the "Residential Property Condition Disclosure Act," which is to become effective July 1, 1995. Generally, the act provides a procedure whereby a seller of "property" (defined as "residential real property improved with not less than one nor more than two dwelling units") provides either a "disclaimer statement" (stating that the seller has never occupied the property, makes no disclosures concerning the condition of the property, and has no actual knowledge of any defect) or a "disclosure statement" (which sets forth several items which must be disclosed) to the purchaser of the property.

It should be noted that the statute's definition of "seller" does not include every type of seller. Rather, a "seller" is defined as one or more persons who are attempting to transfer a possessory interest in property, and who are either represented by a licensed real estate broker or not represented by such broker but who receives a written request from the purchaser to deliver one of the above mentioned "disclaimer statements" or "disclosure statements."

Inasmuch as the "disclaimer statement" can only be used when the seller has "never" occupied the property, the more common type of statement used will be the "disclosure statement." The statute specifies that the disclosure statement shall include an identification of items and improvements which are included in the sale of the property and whether such items or improvements are in normal working order. In addition, the disclosure statement shall specify whether the seller has actual knowledge of defects or information in relation to the following: water and sewer systems; structural systems (including roof, walls, floors, foundation and any basement); plumbing, electrical, heating and air conditioning systems; major fire or tornado damage; land-use matters; existence of hazardous or regulated materials and other conditions having an environmental impact; any other defects known to the seller; and "other matters the Oklahoma Real Estate Commission deems appropriate." Thus, these very specific requirements represent a stark departure from Oklahoma law in effect prior to July 1, 1995.

Regardless of which type of "statement" is applicable, it must be completed, signed, and dated by the seller. The statute specifies that the seller should deliver the disclaimer or disclosure statement to the purchaser "as soon as possible, but in any event it shall be delivered before acceptance of an offer to purchase." If the seller becomes aware of a defect after delivery of the disclaimer or disclosure statement to the purchaser but before the sale, then the seller "shall promptly deliver to the purchaser either a disclosure statement or an amended disclosure statement which discloses the newly discovered defect."

Finally, the statute provides that the exclusive civil remedy for any failure to conform to the act shall be an action for "actual damages" (which shall include the cost of repairing the defect suffered by the purchaser as a result of the defect). Fortunately, the statute provides that, in any action brought under the act, the prevailing party will be allowed court costs and reasonable attorney fees. It should be noted, however, that any action brought under the act must be commenced within 2 years after the date of transfer of the real property.

Furthermore, the act places certain duties on licensed real estate brokers and provides certain exemptions from the application of the act. However, these duties and exemptions are outside the scope of this article.

In short, anyone who is considering selling or purchasing residential property should be aware of the existence of this new law. Licensed real estate brokers should be well-educated regarding the specific disclosure requirements placed upon sellers. However, if problems arise later, an attorney practicing in the appropriate area of the law should be contacted in order to determine rights and remedies under the act.

This "Legal Update" is provided as a public service of Garvin, Agee, Carlton & Mashburn. It is intended to provide general information about the law, and is not a substitute for the advice of an attorney as to specific facts and circumstances. Anyone having any questions regarding the matter contained in this article, or needing advice as to specific facts or circumstances, should contact an attorney practicing in the appropriate area of the law.

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