Many years ago, the Washington State Legislature passed a law requiring sellers of real estate to complete a standardized Property Disclosure Statement.
There are three versions of this disclosure statement: commercial property (of any type), unimproved property (raw land), and improved property (residential). The six-page versions for unimproved and improved property include questions about title and authority to sell, easements, boundary disputes, water, sewer, structures, systems and fixtures, homeowners’ associations, environmental issues, lead-based paint, manufactured home issues, and finally, a promise or verification by the seller that they have been completely honest.
In other words, the seller is supposed to fully disclose any known material defects of the property! Such disclosure does NOT relieve the buyer of their duty to investigate the property!
The seller has four choices for answering each specific question: Yes, No, Don’t Know, or Not Applicable. Since the law gives the buyer a three-day window to revoke their offer in a transaction after receiving a fully completed disclosure, it is important that sellers answer every question, even if the answer is “I don’t know” or “Not applicable.” Without a fully completed form, the three-day clock never starts ticking.
Lenders of bank-owned properties usually ask buyers to waive receipt of the disclosure because they don’t want the liability of answering questions about a foreclosed property they lack firsthand knowledge of. Since the statute says the environmental portion CANNOT be waived, sellers who don’t complete even that portion risk allowing the buyer to walk away anytime up to closing. In other words, if you have not received a completed version of a disclosure statement, you have a “get out of jail (the offer) free card!”
The one and only exception is in the case of an estate sale. Estates are exempt and have no obligation to complete the Seller Disclosure Statement. In such cases, buyers are not entitled to the “get out of jail free” option.
Some sellers have mistakenly tried to use this loophole when their parents are deceased, even though the property has technically already passed to the heirs. One example is when the property is held by an LLC (Limited Liability Company) or trust and the partners or parents are deceased. In these cases, the property may have changed hands and may no longer qualify as an estate sale. Therefore, the Seller Disclosure Statement may need to be completed, even if the partners or trustees have limited knowledge of the property.