CERTIFICATION OF ENROLLMENT

SUBSTITUTE SENATE BILL 6749

Chapter 64, Laws of 2010

61st Legislature
2010 Regular Session



COMMERCIAL REAL ESTATE--SELLERS--DISCLOSURE



EFFECTIVE DATE: 06/10/10

Passed by the Senate February 16, 2010
  YEAS 48   NAYS 0

BRAD OWEN
________________________________________    
President of the Senate
Passed by the House February 28, 2010
  YEAS 96   NAYS 0

FRANK CHOPP
________________________________________    
Speaker of the House of Representatives


 
CERTIFICATE

I, Thomas Hoemann, Secretary of the Senate of the State of Washington, do hereby certify that the attached is SUBSTITUTE SENATE BILL 6749 as passed by the Senate and the House of Representatives on the dates hereon set forth.

THOMAS HOEMANN
________________________________________    
Secretary
Approved March 15, 2010, 3:01 p.m.








CHRISTINE GREGOIRE
________________________________________    
Governor of the State of Washington		 
FILED
March 15, 2010







Secretary of State
State of Washington


_____________________________________________ 

SUBSTITUTE SENATE BILL 6749
_____________________________________________

Passed Legislature - 2010 Regular Session
State of Washington61st Legislature2010 Regular Session

By Senate Labor, Commerce & Consumer Protection (originally sponsored by Senators Fraser and Honeyford)

READ FIRST TIME 02/04/10.   



     AN ACT Relating to the transfer of commercial real estate; amending RCW 64.06.005, 64.06.010, 64.06.022, 64.06.050, and 64.06.070; reenacting and amending RCW 64.06.040; and adding a new section to chapter 64.06 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 64.06.005 and 2009 c 505 s 1 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Commercial real estate" has the same meaning as in RCW 60.42.005.
     (2) "Improved residential real property" means:
     (a) Real property consisting of, or improved by, one to four residential dwelling units;
     (b) A residential condominium as defined in RCW 64.34.020(9), unless the sale is subject to the public offering statement requirement in the Washington condominium act, chapter 64.34 RCW;
     (c) A residential timeshare, as defined in RCW 64.36.010(11), unless subject to written disclosure under the Washington timeshare act, chapter 64.36 RCW; or
     (d) A mobile or manufactured home, as defined in RCW 43.22.335 or 46.04.302, that is personal property.
     (((2))) (3) "Residential real property" means both improved and unimproved residential real property.
     (((3))) (4) "Seller disclosure statement" means the form to be completed by the seller of residential real property as prescribed by this chapter.
     (((4))) (5) "Unimproved residential real property" means property zoned for residential use that is not improved by one or more residential dwelling units, a residential condominium, a residential timeshare, or a mobile or manufactured home. It does not include commercial real estate or property defined as "timber land" under RCW 84.34.020.

Sec. 2   RCW 64.06.010 and 2008 c 6 s 632 are each amended to read as follows:
     This chapter does not apply to the following transfers of ((residential)) real property:
     (1) A foreclosure or deed-in-lieu of foreclosure;
     (2) A gift or other transfer to a parent, spouse, domestic partner, or child of a transferor or child of any parent, spouse, or domestic partner of a transferor;
     (3) A transfer between spouses or between domestic partners in connection with a marital dissolution or dissolution of a state registered domestic partnership;
     (4) A transfer where a buyer had an ownership interest in the property within two years of the date of the transfer including, but not limited to, an ownership interest as a partner in a partnership, a limited partner in a limited partnership, a shareholder in a corporation, a leasehold interest, or transfers to and from a facilitator pursuant to a tax deferred exchange;
     (5) A transfer of an interest that is less than fee simple, except that the transfer of a vendee's interest under a real estate contract is subject to the requirements of this chapter;
     (6) A transfer made by the personal representative of the estate of the decedent or by a trustee in bankruptcy; and
     (7) A transfer in which the buyer has expressly waived the receipt of the seller disclosure statement. However, if the answer to any of the questions in the section entitled "Environmental" would be "yes," the buyer may not waive the receipt of the "Environmental" section of the seller disclosure statement.

NEW SECTION.  Sec. 3   A new section is added to chapter 64.06 RCW to read as follows:
     (1) In a transaction for the sale of commercial real estate, the seller shall, unless the buyer has expressly waived the right to receive the disclosure statement under RCW 64.06.010, or unless the transfer is otherwise exempt under RCW 64.06.010, deliver to the buyer a completed seller disclosure statement in the following format and that contains, at a minimum, the following information:

INSTRUCTIONS TO THE SELLER
Please complete the following form. Do not leave any spaces blank. If the question clearly does not apply to the property write "NA." If the answer is "yes" to any * items, please explain on attached sheets. Please refer to the line number(s) of the question(s) when you provide your explanation(s). For your protection you must date and sign each page of this disclosure statement and each attachment. Delivery of the disclosure statement must occur not later than five business days, unless otherwise agreed, after mutual acceptance of a written contract to purchase between a buyer and a seller.


               NOTICE TO THE BUYER

THE FOLLOWING DISCLOSURES ARE MADE BY SELLER ABOUT THE CONDITION OF THE PROPERTY LOCATED AT . . . . . . . . . . . .
("THE PROPERTY"), OR AS LEGALLY DESCRIBED ON ATTACHED EXHIBIT A.

SELLER MAKES THE FOLLOWING DISCLOSURES OF EXISTING MATERIAL FACTS OR MATERIAL DEFECTS TO BUYER BASED ON SELLER'S ACTUAL KNOWLEDGE OF THE PROPERTY AT THE TIME SELLER COMPLETES THIS DISCLOSURE STATEMENT. UNLESS YOU AND SELLER OTHERWISE AGREE IN WRITING, YOU HAVE THREE BUSINESS DAYS FROM THE DAY SELLER OR SELLER'S AGENT DELIVERS THIS DISCLOSURE STATEMENT TO YOU TO RESCIND THE AGREEMENT BY DELIVERING A SEPARATELY SIGNED WRITTEN STATEMENT OF RESCISSION TO SELLER OR SELLER'S AGENT. IF THE SELLER DOES NOT GIVE YOU A COMPLETED DISCLOSURE STATEMENT, THEN YOU MAY WAIVE THE RIGHT TO RESCIND PRIOR TO OR AFTER THE TIME YOU ENTER INTO A SALE AGREEMENT.

THE FOLLOWING ARE DISCLOSURES MADE BY SELLER AND ARE NOT THE REPRESENTATIONS OF ANY REAL ESTATE LICENSEE OR OTHER PARTY. THIS INFORMATION IS FOR DISCLOSURE ONLY AND IS NOT INTENDED TO BE A PART OF ANY WRITTEN AGREEMENT BETWEEN BUYER AND SELLER.

FOR A MORE COMPREHENSIVE EXAMINATION OF THE SPECIFIC CONDITION OF THIS PROPERTY YOU ARE ADVISED TO OBTAIN AND PAY FOR THE SERVICES OF QUALIFIED EXPERTS TO INSPECT THE PROPERTY, WHICH MAY INCLUDE, WITHOUT LIMITATION, ARCHITECTS, ENGINEERS, LAND SURVEYORS, PLUMBERS, ELECTRICIANS, ROOFERS, BUILDING INSPECTORS, ON-SITE WASTEWATER TREATMENT INSPECTORS, OR STRUCTURAL PEST INSPECTORS. THE PROSPECTIVE BUYER AND SELLER MAY WISH TO OBTAIN PROFESSIONAL ADVICE OR INSPECTIONS OF THE PROPERTY OR TO PROVIDE APPROPRIATE PROVISIONS IN A CONTRACT BETWEEN THEM WITH RESPECT TO ANY ADVICE, INSPECTION, DEFECTS OR WARRANTIES.

Seller . . . . is/ . . . . is not occupying the property.

 
I. SELLER'S DISCLOSURES:

*If you answer "Yes" to a question with an asterisk (*), please explain your answer and attach documents, if available and not otherwise publicly recorded. If necessary, use an attached sheet.
 
1. TITLE AND LEGAL
[ ] Yes[ ] No[ ] Don't knowA. Do you have legal authority to sell the property? If no, please explain.
[ ] Yes[ ] No[ ] Don't know*B. Is title to the property subject to any of the following?
 (1) First right of refusal
 (2) Option
 (3) Lease or rental agreement
 (4) Life estate?
[ ] Yes[ ] No[ ] Don't know*C. Are there any encroachments, boundary agreements, or boundary disputes?
[ ] Yes[ ] No[ ] Don't know*D. Is there any leased parking?
[ ] Yes[ ] No[ ] Don't know*E. Is there a private road or easement agreement for access to the property?
[ ] Yes[ ] No[ ] Don't know*F. Are there any rights-of-way, easements, shared use agreements, or access limitations?
[ ] Yes[ ] No[ ] Don't know*G. Are there any written agreements for joint maintenance of an easement or right-of-way?
[ ] Yes[ ] No[ ] Don't know*H. Are there any zoning violations or nonconforming uses?
[ ] Yes[ ] No[ ] Don't know*I. Is there a survey for the property?
[ ] Yes[ ] No[ ] Don't know*J. Are there any legal actions pending or threatened that affect the property?
[ ] Yes[ ] No[ ] Don't know*K. Is the property in compliance with the Americans with Disabilities Act?
 
2. WATER
[ ] Yes[ ] No[ ] Don't know*Are there any water rights for the property, such as a water right permit, certificate, or claim?
 
3. SEWER/ON-SITE SEWAGE SYSTEM
[ ] Yes[ ] No[ ] Don't know*Is the property subject to any sewage system fees or charges in addition to those covered in your regularly billed sewer or on-site sewage system maintenance service?
 
4. STRUCTURAL
[ ] Yes[ ] No[ ] Don't know*A. Has the roof leaked within the last five years?
[ ] Yes[ ] No[ ] Don't know*B. Has any occupied subsurface flooded or leaked within the last five years?
[ ] Yes[ ] No[ ] Don't know*C. Have there been any conversions, additions, or remodeling?
[ ] Yes[ ] No[ ] Don't know *(1) If yes, were all building permits obtained?
[ ] Yes[ ] No[ ] Don't know *(2) If yes, were all final inspections obtained?
[ ] Yes[ ] No[ ] Don't know*D. Has there been any settling, slippage, or sliding of the property or its improvements?
[ ] Yes[ ] No[ ] Don't know*E. Are there any defects with the following: (If yes, please check applicable items and explain.)
 
□ Foundations
□ Slab Floors
 □ Doors□ Outbuildings
 □ Ceilings□ Exterior Walls
 □ Sidewalks□ Siding
 □ Other 
 □ Interior Walls 
 □ Windows 
   
5. SYSTEMS AND FIXTURES
[ ] Yes[ ] No[ ] Don't know* Are there any defects in the following systems? If yes, please explain.
[ ] Yes[ ] No[ ] Don't know(1) Electrical system
[ ] Yes[ ] No[ ] Don't know(2) Plumbing system
[ ] Yes[ ] No[ ] Don't know(3) Heating and cooling systems
[ ] Yes[ ] No[ ] Don't know(4) Fire and security system
   
6. ENVIRONMENTAL
[ ] Yes[ ] No[ ] Don't know*A. Have there been any flooding, standing water, or drainage problems on the property that affect the property or access to the property?
[ ] Yes[ ] No[ ] Don't know*B. Is there any material damage to the property from fire, wind, floods, beach movements, earthquake, expansive soils, or landslides?
[ ] Yes[ ] No[ ] Don't know*C. Are there any shorelines, wetlands, floodplains, or critical areas on the property?
[ ] Yes[ ] No[ ] Don't know*D. Are there any substances, materials, or products in or on the property that may be environmental concerns, such as asbestos, formaldehyde, radon gas, lead-based paint, fuel or chemical storage tanks, or contaminated soil or water?
[ ] Yes[ ] No[ ] Don't know*E. Is there any soil or groundwater contamination?
[ ] Yes[ ] No[ ] Don't know*F. Has the property been used as a legal or illegal dumping site?
[ ] Yes[ ] No[ ] Don't know*G. Has the property been used as an illegal drug manufacturing site?
 
7. FULL DISCLOSURE BY SELLERS
 A. Other conditions or defects:
[ ] Yes[ ] No[ ] Don't know*Are there any other existing material defects affecting the property that a prospective buyer should know about?
 B. Verification:
 The foregoing answers and attached explanations (if any) are complete and correct to the best of my/our knowledge and I/we have received a copy hereof. I/we authorize all of my/our real estate licensees, if any, to deliver a copy of this disclosure statement to other real estate licensees and all prospective buyers of the property.

DATE . . . . . . . . . . . .
SELLER . . . . . . . . . . . .
SELLER . . . . . . . . . . . .
NOTICE TO BUYER
INFORMATION REGARDING REGISTERED SEX OFFENDERS MAY BE OBTAINED FROM LOCAL LAW ENFORCEMENT AGENCIES. THIS NOTICE IS INTENDED ONLY TO INFORM YOU OF WHERE TO OBTAIN THIS INFORMATION AND IS NOT AN INDICATION OF THE PRESENCE OF REGISTERED SEX OFFENDERS.
 
II. BUYER'S ACKNOWLEDGMENT
 A. Buyer hereby acknowledges that: Buyer has a duty to pay diligent attention to any material defects that are known to Buyer or can be known to Buyer by utilizing diligent attention and observation.
 B. The disclosures set forth in this statement and in any amendments to this statement are made only by the Seller and not by any real estate licensee or other party.
 C.Buyer acknowledges that, pursuant to RCW 64.06.050(2), real estate licensees are not liable for inaccurate information provided by Seller, except to the extent that real estate licensees know of such inaccurate information.
 D.This information is for disclosure only and is not intended to be a part of the written agreement between the Buyer and Seller.
 E.Buyer (which term includes all persons signing the "Buyer's acceptance" portion of this disclosure statement below) has received a copy of this Disclosure Statement (including attachments, if any) bearing Seller's signature.



DISCLOSURES CONTAINED IN THIS DISCLOSURE STATEMENT ARE PROVIDED BY SELLER BASED ON SELLER'S ACTUAL KNOWLEDGE OF THE PROPERTY AT THE TIME SELLER COMPLETES THIS DISCLOSURE STATEMENT. UNLESS BUYER AND SELLER OTHERWISE AGREE IN WRITING, BUYER SHALL HAVE THREE BUSINESS DAYS FROM THE DAY SELLER OR SELLER'S AGENT DELIVERS THIS DISCLOSURE STATEMENT TO RESCIND THE AGREEMENT BY DELIVERING A SEPARATELY SIGNED WRITTEN STATEMENT OF RESCISSION TO SELLER OR SELLER'S AGENT. YOU MAY WAIVE THE RIGHT TO RESCIND PRIOR TO OR AFTER THE TIME YOU ENTER INTO A SALE AGREEMENT.
BUYER HEREBY ACKNOWLEDGES RECEIPT OF A COPY OF THIS DISCLOSURE STATEMENT AND ACKNOWLEDGES THAT THE DISCLOSURES MADE HEREIN ARE THOSE OF THE SELLER ONLY, AND NOT OF ANY REAL ESTATE LICENSEE OR OTHER PARTY.
DATE . . . . . . . BUYER . . . . . . . . . BUYER . . . . . . . . . . . .

     (2) The seller disclosure statement shall be for disclosure only, and shall not be considered part of any written agreement between the buyer and seller of residential property. The seller disclosure statement shall be only a disclosure made by the seller, and not any real estate licensee involved in the transaction, and shall not be construed as a warranty of any kind by the seller or any real estate licensee involved in the transaction.

Sec. 4   RCW 64.06.022 and 2006 c 77 s 1 are each amended to read as follows:
     A seller of residential real property shall make available to the buyer the following statement: "This notice is to inform you that the real property you are considering for purchase may lie in close proximity to a farm. The operation of a farm involves usual and customary agricultural practices, which are protected under RCW 7.48.305, the Washington right to farm act."

Sec. 5   RCW 64.06.040 and 2009 c 505 s 4 and 2009 c 130 s 3 are each reenacted and amended to read as follows:
     (1) If, after the date that a seller of ((residential)) real property completes a real property transfer disclosure statement, the seller learns from a source other than the buyer or others acting on the buyer's behalf such as an inspector of additional information or an adverse change which makes any of the disclosures made inaccurate, the seller shall amend the real property transfer disclosure statement, and deliver the amendment to the buyer. No amendment shall be required, however, if the seller takes whatever corrective action is necessary so that the accuracy of the disclosure is restored, or the adverse change is corrected, at least three business days prior to the closing date. Unless the corrective action is completed by the seller prior to the closing date, the buyer shall have the right to exercise one of the following two options: (a) Approving and accepting the amendment, or (b) rescinding the agreement of purchase and sale of the property within three business days after receiving the amended real property transfer disclosure statement. Acceptance or recision shall be subject to the same procedures described in RCW 64.06.030. If the closing date provided in the purchase and sale agreement is scheduled to occur within the three-business-day rescission period provided for in this section, the closing date shall be extended until the expiration of the three-business-day rescission period. The buyer shall have no right of rescission if the seller takes whatever action is necessary so that the accuracy of the disclosure is restored at least three business days prior to the closing date.
     (2) In the event any act, occurrence, or agreement arising or becoming known after the closing of a ((residential)) real property transfer causes a real property transfer disclosure statement to be inaccurate in any way, the seller of such property shall have no obligation to amend the disclosure statement, and the buyer shall not have the right to rescind the transaction under this chapter.
     (3) If the seller in a ((residential)) real property transfer fails or refuses to provide to the prospective buyer a real property transfer disclosure statement as required under this chapter, the prospective buyer's right of rescission under this section shall apply until the earlier of three business days after receipt of the real property transfer disclosure statement or the date the transfer has closed, unless the buyer has otherwise waived the right of rescission in writing. Closing is deemed to occur when the buyer has paid the purchase price, or down payment, and the conveyance document, including a deed or real estate contract, from the seller has been delivered and recorded. After closing, the seller's obligation to deliver the real property transfer disclosure statement and the buyer's rights and remedies under this chapter shall terminate.
     (4) Failure of a homeowners' association or its officers, directors, employees, or authorized agents to provide requested information in part 8 of the disclosure statement form in RCW 64.06.015 or part 6 of the disclosure statement form in RCW 64.06.020 does not constitute a seller's failure or refusal to provide a real property transfer disclosure statement under subsection (3) of this section.

Sec. 6   RCW 64.06.050 and 1996 c 301 s 5 are each amended to read as follows:
     (1) The seller ((of residential real property)) shall not be liable for any error, inaccuracy, or omission in the real property transfer disclosure statement if the seller had no actual knowledge of the error, inaccuracy, or omission. Unless the seller ((of residential real property)) has actual knowledge of an error, inaccuracy, or omission in a real property transfer disclosure statement, the seller shall not be liable for such error, inaccuracy, or omission if the disclosure was based on information provided by public agencies, or by other persons providing information within the scope of their professional license or expertise, including, but not limited to, a report or opinion delivered by a land surveyor, title company, title insurance company, structural inspector, pest inspector, licensed engineer, or contractor.
     (2) Any ((licensed)) real estate ((salesperson or broker)) licensee involved in a ((residential)) real property transaction is not liable for any error, inaccuracy, or omission in the real property transfer disclosure statement if the licensee had no actual knowledge of the error, inaccuracy, or omission. Unless the ((salesperson or broker)) licensee has actual knowledge of an error, inaccuracy, or omission in a real property transfer disclosure statement, the ((salesperson or broker)) licensee shall not be liable for such error, inaccuracy, or omission if the disclosure was based on information provided by public agencies, or by other persons providing information within the scope of their professional license or expertise, including, but not limited to, a report or opinion delivered by a land surveyor, title company, title insurance company, structural inspector, pest inspector, licensed engineer, or contractor.

Sec. 7   RCW 64.06.070 and 1996 c 301 s 6 are each amended to read as follows:
     Except as provided in RCW 64.06.050, nothing in this chapter shall extinguish or impair any rights or remedies of a buyer of real estate against the seller or against any agent acting for the seller otherwise existing pursuant to common law, statute, or contract; nor shall anything in this chapter create any new right or remedy for a buyer of ((residential)) real property other than the right of recision exercised on the basis and within the time limits provided in this chapter.


         Passed by the Senate February 16, 2010.
         Passed by the House February 28, 2010.
         Approved by the Governor March 15, 2010.
         Filed in Office of Secretary of State March 15, 2010.