The Commercial Brokers Association

The Commercial Brokers Association

Critical Legislative Changes

Commercial Seller Disclosure Statement

Law of Real Estate Agency Pamphlet

June 1, 2012

On June 7, 2012, important changes to the Commercial Seller Disclosure Statement (Form 17 Comm) and the Law of Real Estate Agency Pamphlet will go into effect. You must know how these changes affect you and your clients, and CBA encourages you to read this bulletin completely and thoroughly in order to comply with Washington’s Agency Law and to help your clients comply with the Seller Disclosure Law.

1.Seller Disclosure Statements

A.Addition of New Disclosures

This year, Washington’s Legislature enacted new provisions that require installation of carbon monoxide alarms and detectors in certain dwellings and buildings. In addition, the Legislature revised the Seller Disclosure Law (RCW Chapter 64.06) to require disclosures about the presence and condition of carbon monoxide alarms and detectors.

Specifically, the Commercial Seller Disclosure Statement (Form 17 Comm) was revised to include a new disclosure in Section 5 (“Systems and Fixtures”). The revision provides as follows:

Are there any defects in the following systems? If yes, please explain.

. . .

(5) Carbon monoxide alarms[ ] Yes[ ] No[ ] Don’t know

This change, inquiring about the condition of carbon monoxide alarms, is the only change made to Form 17 Comm for 2012.

If you provide residential real estate brokerage services to clients, please note that similar—but not identical—changes were made to the Residential Seller Disclosure Statement (Form 17) for 2012. Please note, however, that no changes whatsoever were made to the Unimproved Residential Seller Disclosure Statement (Form 17C) this year.

In addition to these changes, the new law provides important protections for real estate brokers. The law provides:

Real estate brokers licensed under chapter 18.85 RCW shall not be liable in any civil, administrative, or other proceeding for the failure of any seller or other property owner to comply with the requirements of this section or rules adopted by the building code council.

As a result, the responsibility to install carbon monoxide alarms and detectors, when required, and to make appropriate disclosures, rests with the owner and seller of the property.

B.Use of New Seller Disclosure Statements

The changes made to the Seller Disclosure Statements will become effective on June 7, 2012. CBA offers the following guidance for any transaction in which you represent a client where the subject property is commercial or residential (improved) property:

• If the Seller and Buyer reach mutual acceptance before June 7, 2012, then
• The previous version of the Seller Disclosure Statement may be used, but only if it will be delivered tothe Buyer before June 7, 2012.
• If the Seller Disclosure Statement has not been or will not be delivered until on or after June 7, 2012, then you and the Seller must deliver the new version of the form (indicated by a revision date of 6/2012).
• If the Seller and Buyer reach mutual acceptance on or after June 7, 2012, then you and the Seller must deliver the new version of the form (again, indicated by a revision date of 6/2012).

Please note that this guidance only applies to Form 17 (Improved Residential) and Form 17Comm (Commercial). It does not apply to Form 17C (Unimproved Residential), for which no revisions were made this year. The version of Form 17C that you should continue to use, therefore, has a revision date of 7/2011.

2.Law of Real Estate Agency Pamphlet

This year, for the first time in many years, the Department of Licensing will revise the Law of Real Estate Agency Pamphlet (the Pamphlet). The revisions are required by a new law that also goes into effect on June 7, 2012. Although the new law only concerns short sales of owner-occupied residential property, it necessitates the use of the new Pamphlet in all real estate brokerage relationships, including those concerning commercial property.

The new Pamphlet will contain a “short sale” disclosure, as follows:

When the seller of owner-occupied residential real property enters into a listing agreement with a real estate licensee where the proceeds from the sale may be insufficient to cover the costs at closing, it is the responsibility of the real estate licensee to disclose to the seller in writing that the decision by any beneficiary or mortgagee, or its assignees, to release its interest in the real property, for less than the amount the borrower owes, does not automatically relieve the seller of the obligation to pay any debt or costs remaining at closing, including fees such as the real estate licensee’s commission.

As you can see, this disclosure is specifically applicable to residential property, but again, you will now be required to use the new Pamphlet in all real estate brokerage relationship, even when the subject property is not a residential property or a short sale.

Remember that it is your duty, as real estate licensees, to (a) make an agency disclosure and (b) provide the Pamphlet to whom you provide real estate brokerage services. Any and all disclosure that you make on or after June 7, 2012 required the new Pamphlet, and you should discard any previous versions of the pamphlet and/or delete electronic copies so that you do not inadvertently fail to make an improper agency disclosure.

Finally, CBA has made new versions of the Seller Disclosure Statement and the Law of Real Estate AgencyPamphlet available on-line. Failure to use these new forms may have serious consequences, so please ensure that you and other member of your firm are using the new forms as set forth in this bulletin beginning June 7, 2012.