For years, selling a home in New York came with an easy workaround. Sellers were required to complete a property condition disclosure form covering everything from plumbing and electrical systems to flooding history and structural issues. But they didn’t actually have to fill it out. Instead, they could hand the buyer a $500 credit at closing and skip the form entirely.
Most sellers took that option. Most buyers barely noticed the credit or understood what they were giving up.
That changed. New York’s legislature closed the workaround, and sellers across New York City, Long Island, and Westchester are now required to provide a complete disclosure form before the contract is signed. Alexander Paykin, Esq., founder of Paykin Law and a New York real estate attorney with extensive experience in residential and commercial transactions, explains what the change means for both sides.
What the Disclosure Form Covers
The property condition disclosure form requires sellers to answer detailed questions about what they know regarding the home’s physical condition. This includes the electrical system, plumbing, roof, foundation, heating, drainage, any history of flooding or water damage, and environmental concerns.
The form is not a professional inspection report. It is a sworn statement from the seller based on their own knowledge. Sellers are not expected to investigate things they don’t know. But if they are aware of a problem, they are required to disclose it.
Why the Old System Mostly Worked for Sellers
Under the previous rules, most sellers opted to pay the $500 credit rather than complete the form. The logic was simple: a completed form creates a paper trail of known defects. A $500 credit creates nothing.
Buyers were assumed to be on notice that they needed to conduct their own due diligence, hire an inspector, get an engineering report, and investigate the property themselves. The credit was effectively a signal that said the seller wasn’t providing information, and the buyer should go find it on their own.
That arrangement favored sellers who preferred not to put known issues in writing. It also meant buyers sometimes closed with an incomplete picture of what they were getting.
What Changed and Why It Matters
With the disclosure now mandatory, sellers cannot substitute a credit for the form. If there are known issues with the property, those issues have to be stated before the contract is executed.
For sellers, this creates both a responsibility and a risk. Failure to disclose a known defect isn’t just a civil matter. It can support a fraud claim after closing. Sellers who are uncertain whether something rises to the level of a required disclosure should consult an attorney before completing the form, not after.
For buyers, the mandatory disclosure adds a layer of information that was previously optional. But it does not replace a professional inspection. The disclosure form tells a buyer what the seller knows. A qualified inspector tells a buyer what the seller may not have noticed, disclosed, or even been aware of. Both documents serve different purposes, and both still matter.
How the Disclosure Fits Into the Transaction
The disclosure form is typically provided alongside the contract and the seller’s rider. The buyer’s attorney reviews everything and prepares a response, which may include questions, pushback on specific terms, or requests for further information based on what the disclosure reveals.
If the disclosure surfaces something significant, such as a history of basement flooding, an unresolved electrical issue, or a structural concern, the buyer has options. They can negotiate a price adjustment, require the seller to remedy the issue before closing, include a contingency that allows exit if an inspection confirms the severity, or simply walk away before the contract is signed.
The moment before contracts are executed is when a buyer has the most leverage. Once signed, the ability to exit without losing the deposit depends entirely on what contingencies were included.
What Sellers Should Do Before Listing
Sellers are better positioned when they think carefully about the property’s condition before a listing goes live, not after an offer arrives.
Sellers who complete the disclosure honestly and early give their attorneys time to address issues before a buyer uses them as leverage. Those who rush to complete the form after an offer comes in often find themselves in a weaker position, responding to questions rather than getting ahead of them.
Working through the disclosure with an experienced real estate attorney before listing is a straightforward step that can prevent larger problems at the worst possible moment.
For buyers and sellers with questions about New York real estate transactions, Paykin Law offers new matter consultations for clients across New York City, Long Island, and Westchester.
Alexander Paykin, Esq., is a New York real estate and commercial attorney and founder of Paykin Law. The firm handles real estate transactions, litigation, foreclosure, and landlord-tenant matters across the New York metro area.
Disclaimer: This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
