Everything You Need to Know: RPCDA
This legal research article is to serve as an “all-you-can-eat” source for the Oklahoma Residential Property Condition Disclosure Act, codified as 60 O.S. Sections 831 to 839. This article will review everything from the language of the statute to the legal cases surrounding it. But first, we start on why:
Purpose of RPCDA: Abrogating Caveat Emptor
Way long ago, back in England, the law was just a never-ending series of court cases without much being placed into statutes. This was known as the “common law” and was eventually carried over into our modern legal system. Legal “truths” like Caveat Emptor, or buyers beware, were part of this foundation; upon which we built our current laws. Of course, over time, these truths were modified (or even abolished) through different statutes & cases.
That is where the RPCDA comes in. This Act serves as a modification of the common law doctrine of Caveat Emptor by limiting the rights, duties, and liabilities of the parties. Traditionally, under common law, the burden of inspection and risk of any defects would be placed squarely with the buyer. However, the RPCDA has changed that formula. Prior to this act, Sellers did not have an affirmative duty to disclose any condition or defects of the property. Now, Seller has such duty (but the act provides protection if that obligation is met).
THE STATUTE
Found in Title 60 O.S. Sections 831 to 839, the Residential Property Condition Disclosure Act became effective on July 1, 1995. Now, this abrogates common law claims like negligence or fraud as the Act is “the exclusive vehicle for recovery where misinformation is communicated in the sale of residential property.” White v. Lim, 2009 OK 79.
The first requirement under the Act is for the Seller to deliver to the purchaser of a property either (a) A disclaimer if they have never occupied the property and have no actual knowledge of any defect or (b) a disclosure statement on the form provided by OREC. This must be done prior to acceptance of an offer to purchase or, if done after acceptance, the buyer must confirm receipt of the form and reaffirm their offer to purchase. If Seller becomes aware of a defect after delivery of the form, Seller must amend said form to include the newly discovered defect. Buyer then must acknowledge receipt of the form and reaffirm the offer to purchase. For these disclosures, Seller is provided immunity for any defect disclosed. Further,
Beyond the basic level, there are some more things we can learn from the statutes and case law surrounding the Act:
(1) The definitions of the act limit its application to only improved residential real property with two or less dwelling units (so duplexes are included). See 60 O.S. 832.
(2) A defect only includes that which “would have a materially adverse effect on the monetary value of the property or impair health/safety.” See 60 O.S. 832.
(3) Transfers from Revocable Trusts (even if the creator, manager, and beneficiary are all the same person) are not included so long as the trustee of the trust never physically occupied the premises. See Rickard v. Coulimore, 2022 OK 9.
(4) Realtor & Broker liability under the act is restricted to only actual knowledge. The act itself does not define actual knowledge, but Oklahoma Courts generally hold this to be a high burden to prove. See Stauff v. Bartnick, 2016 OK CIV APP 76.
(5) The Act excludes specific instances of transfers: (a) pursuant to Court orders (partition, eminent domain, divorce, etc); (b) foreclosure sales; (c) transfers by fiduciary who is not owner-occupant (personal representative deeds, trustee deed, guardianship, conservatorship); (d) transfers to other co-owners; (e) transfers made to spouse or other family; (f) property settlement agreements; (g) mergers; (h) transfers to or from any governmental entity; (i) and transfers of newly constructed, previously unoccupied dwellings.
THE FORMS & DISCLOSURES COVERED
So, with all of that knowledge in hand, let’s get to the actual forms.
The Disclaimer Form is simple enough. It can only be used if the Seller has never occupied the property AND has no actual knowledge of any defect. If either of those are true, then Seller must use the disclosure form. Further, if a defect is discovered, Seller also must use the disclosure form. The form must be dated within 180 days of receipt by the buyer.
The Disclosure From is a bit more complex. There are 86 questions on the form involving pretty much every portion of a normal residential property. For the first 36, the form inquiries about appliances, systems, and services and whether said systems are working, not working, unknown, or not included. Further, if anything is marked not working, Seller is supposed to explain at the bottom of that section.
For the second portion of the form, there are 50 questions regarding whether Seller is aware of issues with various parts of the property. Some of the most common that appear in lawsuits include flooding (and other water damage); additions without permits; roof defects; termite issues; or foundation issues.
If the transaction is exempt from the RPCDA due to any of the reasons described above, there is an additional form called the Residential Property Condition Disclosure Exemption Form Identification of Exempt Transfer. This form simply states the reason for exemption and to be signed and dated by the Seller.
Finally, all residential transactions should have an Acknowledgement and Confirmation of Disclosures form as well. This is a matter of best practice and covers items such as acknowledging receipt of the RPCDA disclaimer/disclosure and lead-based paint hazards.
POTENTIAL LAWSUITS
We at HH Legal hope that this blog has been useful to you. If you have an issue regarding a failure to disclose, please do not hesitate to contact us. There is a two-year statute of limitations that applies to the RPCDA so everyday counts. You can contact an attorney directly at DarrenBarr@HandHLegal.com or by phone at 1.828.851.2963.