New 2023 Residential Property Disclosure Document

Prior to the amendment of the law, anyone selling a home was required to make certain disclosures as to whether not the purchaser would be obligated to be a member of a homeowners' association (“HOA”), that HOA and covenants were a matter of public record, and how to obtain HOA and covenants documents.  

The law now requires that sellers disclose to potential purchasers whether the property is “subject to a common regime of covenants or building restrictions” in addition to the information about the HOA.

In addition, a subtle change was made clarifying that HOA documents can be requested from the seller. While the law does not expressly state that the seller has an obligation to provide HOA documents, it is implied that the seller would provide those HOA documents to the extent that seller has those documents in their possession or can get them without undue burden or expense. This is more fully described below.

Section 7 titled “Miscellaneous”, Question 43 in the current and new PDD requires sellers to disclose if membership in an HOA is mandatory, and to provide information about dues, assessments and contact information for the HOA. 

A new Question 45 was added, which asks whether the property is subject to a common regime of restrictive covenants or building restrictions, or both.  The new law requires this question be included because there are instances where common regimes or restrictive covenants or building restrictions, or both, are present and HOA membership is not mandatory or there is no HOA.

A “common regime” typically means that a person’s ownership of a lot within a community obligates him and all other lot owners in the community to abide by the same covenants and/or restrictions applicable to property in the community.

The use of the term “common regime” is intended to differentiate between restrictive covenants or restrictions that are particular to a specific property versus restrictive covenants or restrictions that apply to all properties within a given area, neighborhood, development, etc. 

Generally, a building restriction is a limitation on the type, size and location of buildings on a property, and is usually done in accordance with a general plan where the purpose is to maintain certain building standards and uniformity in improvements. 

A restrictive covenant is more often implemented for the purpose of maintaining certain standards regarding the nature of the property and its uses, i.e., single-family residential.

They could potentially be two different sets of documents. It is likely that the HOA documents contain restrictive covenants and building restrictions, but they could be separate sets of documents. 

The HOA documents would likely include things like Articles of Incorporation, Bylaws and perhaps rules and regulations adopted by the HOA. 

These documents would likely be maintained by a community management association on behalf of the HOA, or by the HOA Board and/or officers. Most, but not all, HOA governing documents are public record (recorded in the conveyance records of the parish where the property is located). However, some or all of the HOA documents may not have been recorded.

The restrictive covenants and building restrictions governing the property would need to be filed in the public records in order to be binding upon the property and its owners – those almost certainly are a matter of public record. Typically, the terms “covenants” and/or “restrictions” are included in the title, and those are recorded when the neighborhood or development was first formed. They may also be referenced in prior deeds and cash sales.

These documents may have been provided to the seller when the seller acquired the property and those closing documents would be a good place to start when searching. 

The new law requires that the disclosure “include notification to the purchaser that homeowners' association governing documents may be requested from the seller and how to obtain documents regarding any restrictive covenants and building restrictions governing the property to be purchased.” 

The seller should deliver those documents if the documents are in the seller’s possession, but there is nothing in the law requiring the seller to find and deliver the HOA documents. If the seller does not know how to obtain documents regarding any restrictive covenants and building restrictions, the seller would not be required to track that information down. All information about the property completed by the seller on the PDD form is completed "to the best of the seller's knowledge." 

As a good practice, however, the seller (with the help of the listing agent) should undertake the process of locating these documents at the time of publishing the listing by reaching out to the HOA and inspecting prior closing documents, in preparation of being required to complete the PDD form. But, again, the law does not impose an obligation on the seller or listing agent to “leave no stone unturned” to find these documents.

The new law becomes effective January 1, 2023, and disclosures delivered after January 1, 2023, must include changes that comply with the newly adopted version of the law.  However, the document can be used now.

t is seemingly permissible to use a 2022 Property Disclosure Document at the beginning of 2023 if the document was filled out and is dated in the final months of 2022. 

We do, however, urge caution in using a dated Property Disclosure Document. A real estate agent owes a specific duty to communicate accurate information concerning the property to the seller or the purchaser, or both when circumstances warrant, and may be held liable for negligent misrepresentation.  If the Property Disclosure Document is so dated that it is no longer accurate, liability could fall on the real estate agent. Furthermore, the buyer has an absolute right to terminate a real estate contract or withdraw his or her offer within seventy-two hours of delivery of the Property Disclosure Document.  The buyer need not offer an explanation, and an outdated Property Disclosure Document could be of concern to a potential buyer. Therefore, we recommend you consult the seller and closely review the 2022 Property Disclosure Document before making a final determination regarding its use in 2023.