Amended state housing law will help homebuyers

New homebuyers on Long Island shouldn’t suffer the same regrets as Ryan Schneider. He had been unaware of the previous flooding problems surrounding the Farmingdale house he bought in 2017. After a major storm last September, he and his family were forced to relocate and faced repairs for an estimated $90,000 in flood-related damages.

Home buying should be free of unpleasant surprises. A newly amended state law, passed last year and now taking effect, is an important step toward greater disclosure about preexisting conditions of houses on the market. But even more may be needed. 

The 2001 Property Condition Disclosure Act made past flooding and other problems known to potential buyers. The new changes require sellers to be more upfront about preexisting, serious conditions that could cause buyer’s remorse similar to what befell Schneider.

Anyone eager to purchase a new home, especially in today’s tight market, must be alert. Due diligence usually calls for buyers to rely on inspections of the premises by their hired engineer and a review of title and maps by their attorney. Still, buyers are vulnerable. It can become a nightmare if the home they bought in good faith is terribly faulty. Hollywood once made a Tom Hanks comedy called “The Money Pit” about a young couple that bought an Oyster Bay house with a load of unexpected problems. In real life, those problems can ruin a family’s finances.

Under the amended state law, sellers are now asked 56 questions about their property, including new ones about its history of fire and flood damage as well as defects in electrical, heating or plumbing systems. This may seem burdensome to some property owners. But real estate agents found the old form vague. Before the law was amended, sellers and their attorneys were able to offer buyers a $500 credit for skipping the disclosure review altogether. The amended law boosts accountability in what can be the biggest financial transaction of many people's lives.

This comes at a time when the residential real estate industry is already in turmoil over major changes to the way agents are compensated. The recent settlement by the National Association of Realtors of claims that it unfairly fixed fees is expected to reduce costs for buyers, but much is still unknown. These new rules will add more turbulence to buying and selling a home on Long Island.

With sellers filling out the new form, buyers will be better prepared to file a lawsuit if a problem that was never disclosed or deliberately hidden reveals itself. Agents and lawyers already complain it's unclear how well this law can be enforced. State legislators and Gov. Kathy Hochul, who approved last year’s change, should carefully watch how it becomes implemented.