New York Law requires that sellers of residential property provide the buyers with a property condition disclosure form filled out. The form is a series of questions on the physical condition of the house and property. The penalty for not providing this form is a $500 credit to the buyer at closing. In our Westchester County market, attorneys often advise the sellers to pay the $500 in lieu of the form. The rationale is to avoid making any representation, however well intended, which could come back to haunt the seller later on. For example, one of the questions asks if there was ever an oil tank used above or below ground on the property. This may not always be an easy answer; on a property with a 100 year old house and barn, there could be an ancient tank that no one has known about for decades.
The $500 credit is common in Westchester (and a rarity upstate- go figure). However, it is not immunity from liability. The seller still has an obligation to disclose material defects known about the property. For example, if a seller knows that the basement floods every spring or the roof leaks, they cannot conceal this fact. If a seller has doubts about a possible issue, or whether or not they should disclose something, they should consult with their attorney. My thoughts on the brokerage end would be that if you have to ask yourself if something should be disclosed, it probably should be. This often fosters good will and a little bit of Golden Rule dust.