The NC General Assembly enacted the Residential Property Disclosure Act  effective January 1, 1996.  The Act applies to:

Sellers (owners) of residential one-to-four-unit properties  including FSBOs - owners selling their own property. 

Highlights of the Act follow with a brief description of the sellers', buyers', and real estate agents' rights and obligations. 

Sellers' Duty To Disclose     

• Owners/sellers of residential 1-4 unit properties must provide buyers with a completed residential property disclosure statement.

Permitted exemptions to the disclosure requirement include transfers involving:

1. the "first sale" of a new home that has never been lived in,
2. a lease with option to purchase whereby the tenant either occupies or plans to occupy the home,
3. co-owners transferring property,
4. spouses or heirs, transfers by a fiduciary, or transfers required by a legal proceeding.

• Even though the seller has the option of checking "no representation" on the disclosure form, it must still be completed and provided to all potential buyers.

• Owners selling their own property (FSBOs) without the help of an agent must also provide the disclosure statement.

• Relocation companies holding title to residential 1-to-4 family property , even if the property is offered  for immediate resale, must comply.

• If, after completion of the disclosure statement, the owner discovers that any response in the statement is inaccurate because of some error or circumstance, the owner/seller must provide the buyer a corrected disclosure statement.

• The seller is required by law to provide the disclosure statement no later than the time the potential buyer makes an offer to:
  • purchase
  • option or exchange an affected property
  • or, exercises an option to purchase under the terms of a  lease with purchase option.

Buyer's Limited Right To Cancel The Sale

• If the disclosure statement was given to the buyer before the buyer made an offer, then the buyer has NO right to cancel the contract.

• If the buyer or the buyers' agent did not receive a copy of the disclosure statement prior to or at the time the buyer makes an offer, then the buyer may cancel the contract to purchase but the buyers' rights may be limited as follows: 
  • If the disclosure statement is delivered after an offer is made, but the seller has not yet accepted the offer, the buyer has 3 days following receipt of the disclosure statement to cancel the purchase contract.
  • If the disclosure statement is delivered after the seller has accepted the offer from the buyer, or the statement was never delivered, in most cases the buyer has 3 days following the date of  the offer to cancel the contract.
  • If the disclosure statement is delivered after the seller accepts the offer (or the statement was never delivered) AND  if settlement or occupancy by the buyer occurs within 3 days of the accepted offer, then the buyer’s right to cancel the contract expires upon settlement or occupancy by the buyer.
  •  If the disclosure is delivered after the seller accepts the offer or the statement was never delivered, AND settlement occurs within 3 days of the option being exercised (for example: the making of the sales contract), then the buyer’s right to cancel expires upon settlement.

What Are The Agents' Duties Under The Disclosure Act?

Any real estate agent  involved in a residential transaction,  has the "duty" to inform their client of their rights and obligations under the Residential Property Disclosure Act.  This duty applies to:

• Seller's Agents  (Listing Agent)
• Seller's Subagent Working With A Buyer
• Buyer's Agents

Note: A seller's subagent working with a buyer, must deliver the disclosure statement to the buyer and make sure that the buyer is aware of his or her rights under the Act.  Regardless of the agent's role in the transaction, the agent still has a duty to discover and disclose  material facts under most states' licensing laws and/or common law.         

The Listing Agents' Duties

1. Advise the seller if disclosure is required (see exemptions above).
2. Advise the seller of  his/her statutory duty to provide a disclosure statement  (i.e., complete the form).
3. Advise the seller,  in a residential transaction, that a buyer has a  3-day right to terminate (right of rescission) the offer to purchase if the seller does not provide the disclosure statement prior to the buyer making the offer.  Likewise, the seller should be informed that the buyer has no recourse if the disclosure statement is delivered timely. 
4. The listing agent must provide the seller with a copy of the disclosure statement.
5. The agent should assist the seller in completing the form to include:
   • Gathering Data - The agent has a mandatory duty to discover and disclose "material facts" (defects or conditions) that could impact the prospective buyers decision.
   • Accurate and proper completion of the form - Although the agent is not expected to suggest which disclosure option the seller should choose, he/she may advise the seller if it is requested.  
   • Identifying potential problems or defects - The selling agent must discuss with the seller his/her responsibility in disclosing potential "material facts".  A complete "walk-through" inspection with the seller is advisable.
6. Assist in delivering the completed disclosure statement to buyers and their agents.  This is best accomplished by faxing the completed form to the buyers' agent before the house is shown and/or by providing copies at time of showing (usually by keeping a supply of completed forms on the kitchen table). 
7. The listing agent should monitor any changes or newly discovered defects/conditions and immediately update the form for continued reporting accuracy. 
8. If an agent is working directly with a buyer, he/she has the duty to promptly deliver the disclosure statement to the buyer and obtain the prospective buyer’s signature on the form along with the date and time of delivery.
9. If an agent is working directly with a buyer and the potential buyer has not been provided the disclosure statement prior to making any offer, the agent must advise the buyer of his/her right to cancel the contract.
10. The listing agent should obtain the disclosure statement (with buyers original signature) from the buyer's agent and properly deliver it to the seller. 

Note: The selling agent must  disclose to potential buyers any "material fact"  regarding the seller’s property, even if the seller chooses not to disclose to the agent or makes "no representation".

Duties Of Seller's Subagent Working With A Buyer

1. Obtain a copy of the disclosure statement from the seller and provide it to potential buyers (preferably before showing).
2. Insure that the buyer signs and dates the disclosure form and promptly deliver to the seller.
3. Advise the buyer of his/her right to cancel the contract if the disclosure statement was not provided before the offer was made.

Duties Of Buyer's Agent

1. Take affirmative steps to obtain and deliver a disclosure statement to the buyer-client prior to the offer being made.
2. Have the buyer sign, date, and time notate (preferably) the disclosure statement. Give the buyer a copy and return a copy to the listing agent.
3. Discuss the disclosure statement with the buyer to see if there are any areas of concern which may warrant expert inspections. 
4. Immediately advise the buyer of his/her right to cancel  the contract if the disclosure form was not provided before presentation of the offer.