[WSBARP] Why doesn't a buyer get a new three-day rescission period after discovering inaccuracy in the seller's real property disclosure statement?

[David Daniel]

Here is the history (as I recall) on this mistaken amendment to the
statute. The legislature adopted into law that which was previously in
place in the NWMLS Inspection Addendum (Form 35). It was appropriately in
the Inspection Addendum because it prevented Buyer from taking advantage of
a loophole: that after satisfying/waiving their inspection contingency (but
before closing), Buyer (who now needed an out) would demand that Seller
amend Form 17 to disclose that which was revealed through Buyer's
inspection process, but had not been disclosed on Form 17. It was an
unscrupulous trick that would leave Seller stranded under the Seller
Disclosure Statute as they were required to either correct the condition or
amend the disclosure (thereby triggering a new 3-day rescission period for
Buyer). The resulting disputes often ended in "splitting the baby" and
general dissatisfaction.

NWMLS correctly addressed the void by stating in the Inspection Addendum
(Form 35) that which is now in the statute: that Seller need not disclose
defects discovered by Buyer or someone on Buyer's behalf. The problem with
adopting this concept into the seller disclosure statute is that it is not
under the auspices of an inspection contingency, where Buyer would have the
right to renegotiate and/or terminate. Once becoming statutory language,
NWMLS removed it from the Inspection Addendum as it had become superfluous.

So ordinarily when I have a situation where Buyer discovers something late
in the process which it appears Seller should have disclosed, I argue that
Seller's initial disclosure was inaccurate and that Buyer's 3-day
termination right therefore never commenced as the Seller never made a
complete disclosure. This legislative amendment clearly cannot be argued to
authorize intentional misrepresentation by Seller.

It's usually enough to kick up some dust if nothing else.

Happy to discuss further if you'd like.


*David C. Daniel*, Attorney

*____________________________________*
* DEMCO LAW FIRM, P.S.*

*____________________________________ **Office |* (206) 203-6000
*Email |* *ddaniel at demcolaw.com <ddaniel at demcolaw.com>*

5224 Wilson Ave. S., Suite 200

Seattle, WA 98118


On Tue, Mar 31, 2020 at 10:16 AM Rod Harmon <rodharmon at msn.com> wrote:

> As originally enacted in 1994, RCW 64.06.040 required a seller to amend
> the seller disclosure statement if the seller became aware of additional
> information which made any of the disclosures inaccurate.  An amendment
> starts a new three-business-day rescission period.  In the 2009 amendments,
> that requirement was amended to limit the duty to amend to situations in
> which "the seller ((becomes aware)) *learns from a source other than the
> buyer or others acting on the buyer's behalf such as an inspector* of
> additional information … which makes any of the disclosures made inaccurate
> ."  With that amendment, if the buyer discovered the additional
> information after the three-business-day period expired but before closing,
> the seller was not obligated to amend the disclosure statement.  For
> example, say the buyer discovers that the property is in an environmentally
> critical area and the disclosure statement says it is not. Because the
> rescission period had expired, the buyer would not be able to use the
> disclosure statute to rescind. This seems strange to me.
>
> I can see how in that case the buyer could rescind on a common law ground,
> preserved under RCW 64.06.050.  Specifically, the buyer could rescind based
> upon a mutual mistake about a material fact, or, if the seller knew of the
> ECA designation, unilateral mistake by the buyer and concealment by the
> seller.  But I am having trouble understanding why the legislature amended
> the statute so that the buyer could not use RCW 64.06  to rescind the
> contract. I did not find anything in the legislative history that addresses
> it.  I would appreciate any insight anyone has into the reason for this
> amendment. I am hoping someone on this listserv had a hand in drafting it.
>
>
>
> Rod Harmon
>
>
>
> *RODNEY T. HARMON*
>
> *       Attorney at Law*
>
>          P.O. Box 1066
>
>       Bothell, WA   98041
>
>      Tel:   (425) 402-7800
>
>      Fax:  (425) 458-9096
>
>     www.rodharmon.com
>
>    rodharmon at msn.com
>
>
>
>
>
>
>
>
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