House For Sale? Consider Your Form 17.
Selling a home involves an almost overwhelming number of considerations. How should you stage your home? What will be your listing price? How many open houses should you have? Does your house need any touch ups? The list can go on and on. Indeed, even after an offer is accepted, a seller still has to worry about financing contingencies, inspection contingencies, closing requirements, and what will happen with the earnest money deposit if there is a dispute between the parties.
In the midst of all of this, a home seller might be forgiven for glossing over one of the many aspects of the sale process – the seller’s disclosure statement, which is often referred to as the Form 17. The Form 17 is governed under Chapter 64.06 of the Revised Code of Washington, and in the case of improved residential real estate, RCW 64.06.020 in particular.
RCW 64.06.020 outlines the host of disclosures to be made by a seller to their prospective buyer regarding the property, including but not limited to those relating to title issues, sewer issues, structural issues, fixtures, and environmental issues. The Form 17 permits a seller to mark answers to the form questions as “Yes”, “No”, “I don’t know”, and “NA.” Under RCW 64.06.030, the seller has five business days from mutual acceptance to deliver the Form 17, and the buyer has three business days to either approve the disclosure or rescind the purchase and sale agreement. These timelines can be adjusted by agreement of the parties.
To some sellers, the Form 17 can come as an afterthought. However, misrepresentations on the Form 17 can be the basis for litigation. Under RCW 64.06.050, a seller is not liable for errors, inaccuracies, or omissions in the Form 17 where the seller does not have “actual knowledge” of the error, inaccuracy, or omission. Actual knowledge is a high standard, which can afford sellers some comfort.
However, sellers still face substantial risk because under RCW 64.06.070, the Chapter does not “extinguish or impair any right or remedies of a buyer of real estate against the seller or against any agent acting for the seller otherwise existing pursuant to common law, statute, or contract.” In other words, a buyer can still pursue common law remedies for misrepresentation. For example, a buyer may rescind a purchase and sale contract based on misrepresentations in the Form 17 even in the absence of actual knowledge. Jackoswki v. Borchelt, 174 Wn.2d 720, 278 P.3d 1100 (2012). Therefore, a misrepresentation in the Form 17 can have serious consequences depending on the circumstances. A seller should exercise care when making disclosures to a prospective buyer.
The lawyers at Beresford Booth have extensive experience in assisting buyers and sellers in real estate transactions, particularly where disputes, such as those over a Form 17, arise between the parties. If you find yourself in need of legal counsel, please feel free to contact us.