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Louisiana REALTORS® worked with the Louisiana Real Estate Commission (LREC) on changes to the Residential Property Disclosure form following a recent Louisiana Supreme Court decision.  The revised form is now finalized and available for use immediately, but will not be required to be used until March 1, 2018. <<LREC Mandatory Forms>>

LR has prepared this Legal Line article highlighting key changes to the form. In addition to these articles, Louisiana REALTORS® is providing a clean copy of the new form and a “red-lined” version of the form so you can see what changes were made. 


*the following documents are provided as reference to see the changes in the document. LREC website is the official location that the form should be downloaded from and used. 


By:  Patricia B. McMurray, JD | Baker, Donelson, Bearman, Caldwell & Berkowitz, PC

The Property Disclosure Document ("PDD") form required to be completed by all residential seller(s) has been revised by the Louisiana Real Estate Commission ("LREC").[1]  Use of the new form is mandatory on March 1, 2018.

The LREC updated the PDD form partially in response to a decision by the Louisiana Supreme Court in a case which highlighted the possible ambiguity in completing the PDD form in choosing between the "no" or "no knowledge" selections on the existing form.[2]  The revised PDD eliminates the choice of "no" and limits the seller's possible selections to "yes" or "no knowledge".  All information about the property completed by the seller on the PDD form is completed "to the best of the seller's knowledge".

Highlights of the Changes to the PDD Form

1.         Property Disclosure Exemption Form

Page one of the PDD form is revised to be a "Property Disclosure Exemption Form".  Certain sellers by law are exempt from the requirements to provide a PDD form to buyers.  Those sellers claiming to be exempt from completing the PDD form should complete page 1 by selecting the exemption from the list of exemptions and completing the blank shown below and signing page 1.  The buyer also signs this page upon receipt of the PDD form.

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All other sellers (those who do not claim an exemption to the requirement to complete the PDD form) should complete the following box on page 1.  The buyer also signs this page upon receipt of the PDD form.

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All buyers and sellers should initial each page of the PDD form, regardless of whether an exemption is claimed.

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2.         Warranty Information

Page two of the revised PDD form further explains that the PDD is intended to provide information about the property for the buyers and is not intended as a warranty of any kind.  Buyers are encouraged to obtain inspections as they deem prudent.  Added to the previous PDD information is the following notice:

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This notice tracks the Louisiana statute.[3]


3.         Response to Questions about the Property

All responses made by the seller on the form are to the "best of your (the Seller's) knowledge, information or belief."[4]  The PDD form provides:

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In order to eliminate potential confusion by the buyers that a "no" response to a question on the PDD was as an affirmation that that property did not have a certain defect as opposed to the seller did not know of such a defect in the property, the choice of "no" on the PDD form has been eliminated.  The only response as to whether or not a "known defect"[5] to the property exists is "yes" or "NK" (not known).  If the seller marks "yes", the seller should provide an explanation of the known defect.  If the seller marks "NK", no explanation is required.

Although most of the questions on the form remain the same, some questions have been clarified or the order of the questions has been changed to better align the sections of the form.


4.         Road Home and other Federal Grants and Loans

Other additional new sections on the PDD form is on page 4 and 5 regarding federal grants and loans.  If a seller has been the recipient of federal grants, the requirements regarding these grants may provide restrictions on the property, such as the requirement to "obtain and maintain" flood insurance.[6]  Sellers should take care to correctly complete this section to include the amount of the grant received.  A complete example of this information is provided in the box below.

If the seller has been a recent recipient of these types of grants, a copy of the covenants and requirements should be provided to the buyer if possible.


DISCLAIMER
These materials are to be used for informational purposes and should not be construed as specific legal advice.  These materials are not designed to cover every aspect of a legal situation for every factual circumstance that may arise regarding the subject matter included.

This publication is for reference purposes only and association members or other readers are responsible for contacting their own attorneys or other professional advisors for legal or contract advice.  The comments provided herein solely represent the opinions of the authors and is not a guarantee of interpretation of the law or contracts by any court or by the Louisiana Real Estate Commission.


[1]     The PDD form or a similar form is required to be completed by sellers of residential property pursuant to LSA-R.S. 9:3196 - 3200

[2]     Valobra v. Nelson, 14-0164 (La. 04/11/14), 136 So. 3d 793

[3]     La. R.S. 9:3198(c)

[4]     Explanation supplied

[5]     A "known defect" is a condition found within the property that was actually known by the seller and that results in any of the following: (a) has a substantial adverse effect on the value of the property; (b) significantly impairs the health or safety of future occupants of the property; (c) if not repaired, removed  or replaced, significantly shortens the expected normal life of the premises.

[6]     For example see 42 U.S.C.A. § 4012.