NORTH CAROLINA REAL PROPERTY DISCLOSURES

A Brief Overview

Brian H. Elam

Chapter 47E

• The requirements of Real Property Disclosure are governed by Statute

• The rules are found in Chapter 47E of the North Carolina Statutes

• There is ONLY ONE allowable form of disclosure in NC created by the Real Estate Commission– Must disclose property condition and HOA info– Must disclose status of Mineral Rights

Property Disclosure Form

Property Disclosure Form

• The acceptable form is 4 pages long and includes 3 choices for disclosure:– Yes– No– No Representation

• Please note that the Real Estate Commission takes the position that NC licensed realtors may not select No Representation

• You may download the form here: Discloure Form

Mineral Disclosure Form

Mineral Disclosure Form

• The form is 1 page long and includes 3 choices for disclosure:– Yes– No– No Representation

• You may download the form here: Mineral Form

WHEN DOES THE DISCLOSURE FORM REQUIREMENT APPLY?

• ANY transfer of a 1-4 Unit Residential Dwelling by:– Sale or Exchange– Under an Installment Sale (eg Contract for Deed)– Option– Lease with an Option

EXEMPTIONS FROM DISCLOSURE REQUIREMENTS

• There are many exemptions listed in the statutes, but here are the relevant ones:– Transfers between co-owners (must not include a new

owner)– Transfers to spouse or lineal descendant

• The following transfers are exempt from the Property Disclosure but NOT from the Mineral Disclosure– Lease with an Option where lessee intends to occupy the

dwelling– When both parties agree not to complete the property

disclosure

OTHER THINGS TO KNOW

• Must be done on the Realtor forms• Disclosure forms must be delivered to Purchaser at

the time of entering into the contract or the Purchaser can terminate the contract and receive a refund of all monies paid within 3 days upon written notice to Seller

• Seller can avoid selecting the choices on the forms by delivering professional reports with the forms

• Seller has a continuing duty to update the accuracy of the disclosures until closing

Final Thoughts

• As a business practice, you should get in the habit of using the disclosure forms. Personally, I think it lends credibility to you to accurately disclose what you know about the property.

• Bear in mind that additional disclosures regarding Lead Based Paint may be required for older homes you are selling.

• If you are not a licensed realtor, the risk to you of failing to provide the disclosure forms is negligible; however, it may add fuel to the fire of a fraud complaint from a dissatisfied buyer.

APPENDIX – Chapter 47E

• Here is where you can find the actual statutes regarding the disclosures: Statutes

• NOTE: The Statutes are only half of the story. Court cases will dictate how the Statutes are applied to your particular situation.