Do Sellers Need to Complete the Form 17 Seller Disclosure Statement?
In almost every residential sale of real estate, the seller is required to provide a Seller Disclosure Form. This is usually completed on MLS Form 17. In a recent Washington case, the court addressed the effect of an incomplete Form 17. The case is Lyons v. Liu and the opinion of Division 1 of the Washington State Court of Appeals was filed on January 13, 2025. The opinion is “unpublished” which means that it is not binding on future courts, but it can be used a persuasive authority in arguments in future cases.
Facts
In Lyons v. Liu the seller inadequately answered a question regarding whether the property is subject to a homeowner’s association. The question states that if there is a homeowner’s association, the seller is to provide the name of the association and contact information for an officer, director, employee or other authorized agent, who may provide the association’s financial statements, minutes, bylaws, fining policy and other information that is not publicly available. The seller simply answered the question by stating “Diamond Creek.” Therefore, this answer was incomplete.
The Buyer signed in two places on the Form 17 stating both that 1) the buyer has received the seller disclosures and 2) that “Buyer has read and reviewed the Seller’s responses to this Seller Disclosure Statement. Buyer approves this statement and waives Buyer’s right to revoke Buyer’s offer based on this disclosure.”
The seller disclosure statement was received on March 26, and the buyer attempted to rescind the agreement on September 8, which is clearly more than three days after the buyer received the seller disclosure statement.
Holding
Until a seller has delivered the seller disclosure statement, a buyer has a right to rescind the agreement. The court recites that RCW 64.06.020, the statute that requires the seller disclosure, states in part: “the seller shall … deliver to the buyer a completed seller disclosure statement in the following format and that contains, at a minimum, the following information.” The court held that because the buyer signed the portion of the Form 17 stating that the buyer had read, reviewed and approved the statement, the buyer waived their rights to rescind the agreement based on the clearly incomplete disclosure made by the seller.
RCW 64.03.040 requires a seller to make the seller disclosure statement “as required under this chapter,” which arguably requires a completed seller disclosure statement. Although the court did not require the seller to deliver a completed seller disclosure statement, which is required by RCW 64.03.040, this holding makes sense because the buyer acknowledged that they had reviewed and approved the disclosure statement.
The court then addresses the argument that the buyer had an ongoing right to rescind because the buyer never received a completed seller disclosure statement. The court held that because the buyer received a seller disclosure statement, regardless of its completeness, the buyer had a right of rescission that ended three days after receiving Form 17. This holding does not appear to hinge on the fact that the buyer signed stating that he reviewed and approved of the seller disclosure statement. It appears from this portion of the holding that a buyer’s right of rescission begins upon receiving any seller disclosure statement, even if it is incomplete. This holding appears to gut the Legislature’s requirement that the disclosure statement be delivered “as required by this chapter,” i.e. a complete seller disclosure statement.
Conclusion
The statute is clear that the seller disclosure statement must be complete, but this court decision calls into question the enforceability of that requirement. Any buyer receiving a seller disclosure statement should check for its completeness before signing any of the acknowledgements regarding receiving the statement, because a court may not hold the seller’s feet to the fire regarding the completeness of the form. It is possible that the passage of time in this case, almost six months, between receiving the seller disclosure form and the attempt to rescind was just too much for the court. Because this is an unpublished opinion, it is possible that a court could find that completeness is required in a future case, but this suggests that a buyer needs to act diligently if they believe the disclosure is incomplete for any reason.
To learn more about Washington’s Form 17, please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.
