Rolling out the Revised RPOADS!

At its March 2024 meeting, the Commission approved the revised RPOADs form for use beginning July 1, 2024.  If you haven’t seen it yet, click here to take a look. The format is different, but many of the questions are the same. In addition, more detailed questions have been added addressing flooding and related issues. Other questions were revised, deleted or added.  The form is longer, largely due to the many requests the Commission received to increase the font size. 

The first page contains updated instructions for owners, buyers, and broker.  Familiarize yourself with the revised instructions and form.  Brokers are required to inform their clients/customers about their rights and duties related to the Disclosure, so it’s important that you know and understand them yourself. 

The law (N.C.G.S. 47E) requires residential property owners to complete the Disclosure Statement and provide it to the buyer prior to any offer to purchase. If the owner fails to do so, a buyer may be able to cancel any contract.  There are limited exemptions for completing the form, such as new home construction that has never been occupied. 

Owners are required to answer every question by selecting Yes (Y), No (N), No Representation (NR), or Not Applicable (NA).  Owners may choose to make no representation for all or some of the questions on the form. Some characteristics or features simply may not apply to a particular property; these (and only these) now have a “NA” option. If an owner selects NA, it means the property does not contain a particular item or feature. 

It is important for licensees to remember that the disclosures made in the Disclosure Statement are those of the owner(s), not the listing broker.  A broker’s duty to disclose is separate from that of the owner.  If you represent the owners, and they choose to make no representations, be sure you advise them that you are still obligated to disclose any material facts about the property to potential buyers. 

If an owner selects Y or N, the owner is only required to disclose information about which they have actual knowledge. If they answer Y to any question, they should provide an explanation of the issue, or they can attach a report from an attorney, engineer, contractor, pest control operator, or other expert or public agency describing it.

If an owner selects N, the owner is indicating they have no actual knowledge of the matter, including any problem. If the owner selects N and the owner knows there is a problem or that the owner’s answer is not correct, the owner may be liable for making an intentional misstatement.  A broker representing an owner should be sure their client understands this. 

Owners are not required to disclose any of the material facts that have a NR option, even if they have knowledge of them. However, licensees should be aware that an owner’s failure to disclose hidden defects may result in civil liability for the owner. If an owner selects NR, it could mean that the owner (1) has knowledge of an issue and chooses not to disclose it; or (2) simply does not know.  If you are representing a buyer, be sure you explain this to the buyer when you review the Disclosure with them.  Simply sending them the Disclosure is not sufficient.  Instead, review it with them, and advise them to get their own inspections to determine any defects that aren’t revealed in the Disclosure.  The Disclosure is not a warranty of any kind, and no Disclosure is a substitute for a thorough home inspection.  Remember, many defects are hidden, and the owner may not have discovered them yet.  Also, let your buyer clients know that the Disclosure only applies to dwellings (structures intended for human habitation) so detached sheds, garages, etc. need to be inspected as well.

All brokers, owners and buyers should keep signed copies of the Disclosure for their records.  If the listing broker or owner discovers something about the property after the Disclosure has been completed or given to the buyer, the Disclosure must be updated and any buyer, or prospective buyer, should be immediately informed. 

Finally, remember that brokers cannot complete the form for the owner, but they must advise the owner to answer all questions on the form, even if it is with NR.  A broker selling property they own must complete the form unless exempt, and they can still select NR.  However, selecting NR does not relieve them from their duty as a broker to disclose material facts they know or should reasonably know about the property.  Therefore, if you are selling your own property, as a broker, you MUST make disclosures, either using the form or separately.

If you list a property prior to July 1, 2024, you do not need to have your owners create a new disclosure using the revised form.  You can use the new form if you want to try it out; however, the current one is just fine.  If you have to update the form, beginning July 1, you must use the revised one.  For any listings taken on or after July 1, use the revised form only

Remember, communication with your clients about everything is always key.  If you represent the owners, explain the form to them, make sure it is completed and provided, and updated as necessary.  Don’t take the owners’ word for things without verifying before you advertise features.  Make your own reasonable investigation and required disclosures. Disclosures are best made in writing so you can demonstrate you made them if there is ever any question.  If you represent a buyer, explain the Disclosure, go through it with them, be sure every question is answered, and explain the importance of getting their own thorough inspections.  Following up with an email documenting your discussions with your clients will help if there is ever any question. Look for issues when you visit the property, and follow up with your buyers’ expressed specific needs to be sure the property is suitable for them.  These additional steps may take you a little time on the front end, but can save you a lot of time down the road.