GENERAL ASSEMBLY OF NORTH CAROLINA
1997 SESSION

SESSION LAW 1997-472
HOUSE BILL 899

AN ACT TO MODIFY THE REQUIREMENTS FOR DISCLOSURES UPON THE SALE OF RESIDENTIAL PROPERTIES.

The General Assembly of North Carolina enacts:

Section 1.  G.S. 47E-4 reads as rewritten:
"§ 47E-4.  Required disclosures.
(a)	With regard to transfers described in G.S. 47E-1, the owner of the real property shall furnish to a purchaser a residential property disclosure statement. The disclosure statement shall:
(1)	Disclose those items which are required to be disclosed relative to the characteristics and condition of the property and of which the owner has actual knowledge; or
(2)	State that the owner makes no representations as to the characteristics and condition of the real property or any improvements to the real property except as otherwise provided in the real estate contract.
	
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(b)	The North Carolina Real Estate Commission shall develop and require the use of a standard disclosure statement to comply with the requirements of this section.  The disclosure statement shall specify that certain transfers of residential property are excluded from this requirement by G.S. 47E-2, including transfers of residential property made pursuant to a lease with an option to purchase where the lessee occupies or intends to occupy the dwelling, and shall include at least the following characteristics and conditions of the property:
(1)	The water supply and sanitary sewage disposal system;
(2)	The roof, chimneys, floors, foundation, basement, and other structural components and any modifications of these structural components;
(3)	The plumbing, electrical, heating, cooling, and other mechanical systems;
(4)	Present infestation of wood-destroying insects or organisms or past infestation the damage for which has not been repaired;
(5)	The zoning laws, restrictive covenants, building codes, and other land-use restrictions affecting the real property, any encroachment of the real property from or to adjacent real property, and notice from any governmental agency affecting this real property; and
(6)	Presence of lead-based paint, asbestos, radon gas, methane gas, underground storage tank, hazardous material or toxic material (whether buried or covered), and other environmental contamination.
The disclosure statement shall provide the owner with the option to indicate whether the owner has actual knowledge of the specified characteristics or conditions, or the owner is making no representations as to any characteristic or condition.
(c)	The rights of the parties to a real estate contract as to conditions of the property of which the owner had no actual knowledge are not affected by this Article unless the residential disclosure statement states that the owner makes no representations as to those conditions. If the statement states that an owner makes no representations as to the conditions of the property, then the owner has no duty to disclose those conditions, whether or not the owner should have known of them."
Section 2.  G.S. 47E-5 reads as rewritten:
"§ 47E-5.  Time for disclosure; cancellation of contract.
(a)	The owner of real property subject to this Chapter shall deliver to the purchaser the disclosure statement required by this Chapter no later than the time the purchaser makes an offer to purchase, exchange, or option the property, or exercises the option to purchase the property pursuant to a lease with an option to purchase. The residential property disclosure statement may be included in the real estate contract, in an addendum, or in a separate document.
(b)	If the disclosure statement required by this Chapter is not delivered to the purchaser prior to or at the time the purchaser makes an offer, the purchaser may cancel any resulting real estate contract.  The purchaser's right to cancel shall expire if not exercised prior to the following, whichever occurs first:
(1)	The end of the third calendar day following the purchaser's receipt of the disclosure statement;
(2)	The end of the third calendar day following the date the contract was made;
(3)	Settlement or occupancy by the purchaser in the case of a sale or exchange; or
(4)	Settlement in the case of a purchase pursuant to a lease with option to purchase.
Any right of the purchaser to cancel the contract provided by this subsection is waived conclusively if not exercised in the manner required by this subsection.
In order to cancel a real estate contract when permitted by this section, the purchaser shall, within the time required above, give written notice to the owner or the owner's agent either by hand delivery or by depositing into the United States mail, postage prepaid, and properly addressed to the owner or the owner's agent. If the purchaser cancels a real estate contract in compliance with this subsection, the cancellation shall be without penalty to the purchaser, and the purchaser shall be entitled to a refund of any deposit the purchaser may have paid.  Any rights of the purchaser to cancel or terminate the contract for reasons other than those set forth in this subsection are not affected by this subsection."
Section 3.  G.S. 47E-6 reads as rewritten:
"§ 47E-6.  Owner liability for disclosure of information provided by others.
The owner may discharge the duty to disclose imposed by this Chapter by providing a written report attached to the residential property disclosure statement by a public agency or by an engineer, land surveyor, geologist, pest control operator, contractor, home inspector or other expert, dealing with matters within the scope of the public agency's functions or the expert's license or expertise.  The owner shall not be liable for any error, inaccuracy, or omission of any information delivered pursuant to this section if the error, inaccuracy, or omission was made in reasonable reliance upon the information provided by the public agency or expert and the owner was not grossly negligent in obtaining the information or transmitting it."
Section 4.  G.S. 47E-8 reads as rewritten:
"§ 47E-8.  Agent's duty.
A real estate broker or salesman acting as an agent in a residential real estate transaction has the duty to inform each of the clients of the real estate broker or salesman of the  client's rights and obligations under this Chapter. Provided the owner's real estate broker or salesman has performed this duty, the broker or salesman shall not be responsible for the owner's willful refusal to provide a prospective purchaser with a residential property disclosure statement. Nothing in this Chapter shall be construed to conflict with, or alter, the broker or salesman's duties under Chapter 93A of the General Statutes."
Section 5.  G.S. 47E-1 reads as rewritten:
"§ 47E-1.  Applicability.
This Chapter applies to the following transfers of residential real property consisting of not less than one nor more than four dwelling units, whether or not the transaction is with the assistance of a licensed real estate broker or salesman:
(1)	Sale or exchange,
(2)	Installment land sales contract,
(3)	Option, or
(4)	Lease with option to purchase, except as provided in G.S. 47E-2(10)."
Section 6.  Section 1 of this act becomes effective October 1, 1998, and applies to contracts entered into on or after that date.  Sections 2, 3, and 4 of this act become effective December 1, 1997, and apply to contracts entered into on or after that date.  Section 5 of this act is effective when this act becomes law.  Effective when this act becomes law, the North Carolina Real Estate Commission is authorized to develop the standard disclosure statement under the amendments made by this act to G.S. 47E-4(b) to become effective October 1, 1998.
In the General Assembly read three times and ratified this the 21st day of August, 1997.
s/	Marc Basnight
President Pro Tempore of the Senate

s/	Harold J. Brubaker
Speaker of the House of Representatives

s/	James B. Hunt, Jr.
Governor

Approved 11:53 a.m. this 2nd day of September, 1997