What is an NC seller required to represent to their buyers?

A buyer and seller rely on representations made by each other to decide whether or not they would like to enter into a contract. Let’s define what a representation is. A representation is a “statement of fact made by one party to induce the other party to rely on it and enter into the contract”.

If you are using a 2-T contract to make your offer, there are five things a seller must represent: 

Ownership

The seller is required to disclose how long he has owned the property or if he does not own the property. So why is this important to a buyer? If a buyer is financing the purchase and the seller has owned the property for less than a year, the lender may require proof that the property is not being flipped. This risk can be reduced by the buyer if he ascertains how long the seller has owned the property prior to submitting the offer and discusses this with his lender to flush out any potential issues with financing.

If a seller checks the box indicating he does not own the property, it is still a binding contract, and the seller may have acquired an option to purchase the property, or the property may currently be under contract. If this is the case, it’s recommended that the buyer contact a real estate attorney to draft a contingency regarding what happens should the seller be unable to transfer title at settlement.

 Lead-Based Paint

Next up, the seller is required to disclose whether the property was built before 1978. If the property was indeed built before 1978, the seller is required to provide a completed Lead-Based Paint Disclosure. If the seller has accepted your offer and not provided you with the disclosure you may not be obligated to purchase the property under federal law.

 Owners’ Associations and Dues

 If the property is a part of an Owners’ Association, the seller is required to specify the name of the association as well as the regular dues and its frequency, and the contact information for the owner’s association or the association manager.

On the Residential Property and Owners’ Association Disclosure Statement, under section H, the seller has an opportunity to disclose to the best of their knowledge whether there are any proposed or confirmed special assessments and identify them. This is important to a buyer so that they can financially plan for any additional expenses down the road.

Fuel Tanks/Fuel

Fuel tanks, particularly for propane and heating oil are relatively common in North Carolina homes especially in rural areas or where natural gas is not available. A seller must also disclose to the best of their knowledge whether or not a fuel tank is located on the property. If a tank is on the property, the tank will be included in the sale free of any liens unless specifically excluded in the contract.

Leases

If a property is subject to a lease, the seller must disclose that fact on the 2-T as well as include the Additional Provisions Addendum or the Vacation Rental Addendum with the offer.

Bottom Line

If your realtor is completing the offer for you, they will complete the seller representation section based on available information from the MLS as well as county websites. If the seller representation information is incorrect, the seller should review and make corrections. If the seller has to make corrections, this will constitute a counteroffer.

I recommend reading through the 2-T contract in detail before making any offers. The pre-reading will afford you the opportunity to ask questions and seek clarifications. If you would like a sample copy of the 2-T, please send me an email at CJ@clairesells.com.