Selling a house is a significant milestone yet a daunting task. Right from preparing your house for selling to finding buyers, negotiating, and closing the deal, is all a complex journey. Further, if you think that once you sign the sales contract you are done with all the responsibilities, you might be mistaken.

Selling a house in a state like New York comes with certain responsibilities. But exactly when and how long are you liable for any issues arising after closing?

Let’s find out, as understanding your liability after selling a house is crucial to avoiding legal disputes and protecting your interests.

When Is A Seller Held Liable After Selling A House?

Being a homeowner entails routine maintenance and repairs. After closing, new homeowners (buyers) often discover defects in the property, but your (seller’s) liability for any issues that existed before is limited.

However, it is your, your representative’s, and your inspector’s responsibility to disclose any known property defects as well as important information that can influence the property’s appeal.

Therefore, if you conceal material facts like the need for repairs or knowingly give false statements or make omissions, it could be considered fraud on your behalf and you could be held partially or fully responsible for the problems like repairs after closing.

According to the law, to make the seller liable for issues after the closing, the buyer must be able to prove that the seller breached the sales contract or any repair warranty, failed to disclose as required by state law, was fraudulent or negligent in disclosing information, or willfully misrepresented the state of the property.

When Is A Seller Not Held Liable After Selling A House?

If it is proved that you disclosed to the buyer all known defects or crucial information and did not do anything to prevent the buyer from finding any defects in the property, you are unlikely to be held accountable for any property issues after the closing.

Besides, rather than the seller, the real estate agent or the inspector can be held responsible for their failure to disclose if the seller was unaware of the defects but they were.

For instance, a real estate agent may be charged with fraud and deception if they conspire with a home inspector to hide damages to protect a deal from falling through. The seller can not be held accountable in this scenario.

That is why buyers need to do thorough property analysis and inspections before closing.

Requirements Under The New York Property Law

Regarding a home seller’s liability after a sale, different states have different laws and regulations.

Early on in the history of property law, New York adhered to the traditional principle known as “caveat emptor,” or “let the buyer beware“. This meant that sellers would not be held liable if they disclosed nothing about their property defects.

Later, New York courts implemented measures to safeguard buyers by establishing exceptions. For instance, a seller who possesses a special relationship of trust with the buyer, like that of trustee-beneficiary, guardian-ward, agent-principal, or attorney-client, could be held responsible for concealed property defects.

Furthermore, the courts declared that sellers can be held accountable to the buyers for any damages if they actively concealed defects. ‘Active concealment’ refers to a situation in which the seller obstructed the buyer’s attempts to inspect the property and knew about any damage but chose not to disclose it.

Property Condition Disclosure Act (PCDA)

The Property Condition Disclosure Act (PCDA) is the disclosure law in New York for property sales. Under this act, the seller is required to make certain disclosures about the property by giving the buyer a disclosure statement before the sales contract is signed.

Until now, the seller had the option to pay a credit of $500 towards the purchase price to the buyer at the closing if unable to deliver the disclosure statement. However, as per the latest amendment in the act, PCDA will no longer allow a seller of residential real estate to give the buyer a $500 credit instead of the disclosure statement, effective as of March 20, 2024.

Is The Seller Held Liable After Selling A House In Case Of As-in Clause?

An ‘as-in’ clause in a sales contract simply indicates that the house is being sold in its existing condition and the buyer accepts it ‘as-is’. This also means that you (the seller) need not need to fix any property defects disclosed or otherwise discovered by the buyer before the closing.

That’s why the buyer is still responsible to conduct an inspection and asses any property defects or find issues to make an informed decision.

If the buyer finds some defects in the property yet buys it anyway, cannot hold the seller liable after closing. However, despite the as-in clause, sellers can be held liable for fraudulent misrepresentation if they have sold the property without disclosing any known defects, or their inspections didn’t reveal the problem.

Statute Of Limitations In New York For Real Estate Transactions

If the buyer holds you responsible for any property repairs or other issues after closing, they can file a lawsuit but within a limited amount of time. This window of time is the ‘statute of limitations’.

Depending on the type of case and claim, the statute of limitations in New York State for real estate transactions typically ranges from one year to six years or even 10 years in some cases.

For example, in case of fraud or breach of contract in the sale of property, the statute of limitations is six years from the date of the fraud or from the date the contract was broken respectively.

The Final Say

By being transparent, making precise agreements, and getting expert advice, you can protect yourself from problems that may arise after the sale. You can contact our experts at Elite Properties today if you’re planning to have a smooth home-selling journey.