HOUSE BILL No. 6179 June 5, 2002, Introduced by Reps. Gieleghem, Kolb, Thomas, Spade, Williams, Schauer, Hale, Zelenko and Dennis and referred to the Committee on Commerce. A bill to require certain disclosures by sellers of real property. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. This act shall be known and may be cited as the 2 "toxic mold disclosure act". 3 Sec. 2. The seller disclosure requirements of sections 4 to 4 13 apply to the transfer of any interest in real estate, whether 5 by sale, exchange, installment land contract, lease with an 6 option to purchase, any other option to purchase, or ground lease 7 coupled with proposed improvements by the purchaser or tenant, or 8 a transfer of stock or an interest in a residential cooperative. 9 Sec. 3. The seller disclosure requirements of sections 4 to 10 13 do not apply to any of the following: 11 (a) Transfers pursuant to court order, including, but not 12 limited to, transfers ordered by a probate court in 05788'01 DRM 2 1 administration of an estate, transfers pursuant to a writ of 2 execution, transfers by any foreclosure sale, transfers by a 3 trustee in bankruptcy, transfers by eminent domain, and transfers 4 resulting from a decree for specific performance. 5 (b) Transfers to a mortgagee by a mortgagor or successor in 6 interest who is in default, or transfers to a beneficiary of a 7 deed of trust by a trustor or successor in interest who is in 8 default. 9 (c) Transfers by a sale under a power of sale or any fore- 10 closure sale under a decree of foreclosure after default in an 11 obligation secured by a mortgage or secured by any other instru- 12 ment containing a power of sale, or transfers by a mortgagee who 13 has acquired the real property at a sale conducted pursuant to a 14 power of sale under a mortgage or a sale pursuant to a decree of 15 foreclosure or has acquired the real property by a deed in lieu 16 of foreclosure. 17 (d) Transfers by a nonoccupant fiduciary in the course of 18 the administration of a decedent's estate, guardianship, conser- 19 vatorship, or trust. 20 (e) Transfers from 1 co-tenant to 1 or more other 21 co-tenants. 22 (f) Transfers made to a spouse, parent, grandparent, child, 23 or grandchild. 24 (g) Transfers between spouses resulting from a judgment of 25 divorce or a judgment of separate maintenance or from a property 26 settlement agreement incidental to such a judgment. 05788'01 3 1 (h) Transfers or exchanges to or from any governmental 2 entity, unless the real estate being transferred contains 1 or 3 more buildings that will be inhabited or occupied by persons 4 after the transfer. 5 (i) Transfers made by a person licensed under article 24 of 6 the occupational code, 1980 PA 299, MCL 339.2401 to 339.2412, of 7 newly constructed residential property that has not been 8 inhabited. 9 Sec. 4. (1) The transferor of any real property described 10 in section 2 shall deliver to the transferor's agent or to the 11 prospective transferee or the transferee's agent the written 12 statement required by this act. If the written statement is 13 delivered to the transferor's agent, the transferor's agent shall 14 provide a copy to the prospective transferee or his or her 15 agent. A written disclosure statement provided to a transferee's 16 agent shall be considered to have been provided to the 17 transferee. The written statement shall be delivered to the pro- 18 spective transferee within the following time limits: 19 (a) In the case of a sale, before the transferor executes a 20 binding purchase agreement with the prospective transferee. 21 (b) In the case of transfer by an installment sales contract 22 where a binding purchase agreement has not been executed, or in 23 the case of a lease together with an option to purchase or a 24 ground lease coupled with improvements by the tenant, before the 25 transferor executes the installment sales contract with the pro- 26 spective transferee. 05788'01 4 1 (2) With respect to any transfer subject to subsection (1), 2 the transferor shall indicate compliance with this act either on 3 the purchase agreement, the installment sales contract, the 4 lease, or any addendum attached to the purchase agreement, con- 5 tract, or lease, or on a separate document. 6 (3) Except as provided in subsection (4), if any disclosure 7 or amendment of any disclosure required to be made by this act is 8 delivered after the transferor executes a binding purchase agree- 9 ment, the prospective transferee may terminate the purchase 10 agreement by delivering written notice of termination to the 11 transferor or the transferor's agent within the following time 12 limits: 13 (a) Not later than 72 hours after delivery of the disclosure 14 statement to the prospective transferee, if the disclosure state- 15 ment was delivered to the prospective transferee in person. 16 (b) Not later than 120 hours after delivery of the disclo- 17 sure statement to the prospective transferee, if the disclosure 18 statement was delivered to the prospective transferee by regis- 19 tered mail. 20 (4) A transferee's right to terminate the purchase agreement 21 expires upon the transfer of the subject property by deed or 22 installment sales contract. 23 Sec. 5. (1) The transferor or his or her agent is not 24 liable for any error, inaccuracy, or omission in any information 25 delivered pursuant to this act if the error, inaccuracy, or omis- 26 sion was not within the personal knowledge of the transferor, or 27 was based entirely on information provided by public agencies or 05788'01 5 1 provided by other persons specified in subsection (3), and 2 ordinary care was exercised in transmitting the information. It 3 is not a violation of this act if the transferor fails to dis- 4 close information that could be obtained only through inspection 5 or observation of inaccessible portions of real estate or could 6 be discovered only by a person with expertise in a science or 7 trade beyond the knowledge of the transferor. 8 (2) The delivery of any information required by this act to 9 be disclosed to a prospective transferee by a public agency or 10 other person specified in subsection (3) shall be considered to 11 comply with the requirements of this act and relieves the trans- 12 feror of any further duty under this act with respect to that 13 item of information, unless the transferor has knowledge of a 14 known defect or condition that contradicts the information pro- 15 vided by the public agency or the person specified in 16 subsection (3). 17 (3) The delivery of a report or opinion prepared by a 18 licensed professional engineer, industrial hygenist, contractor, 19 or other expert, dealing with matters within the scope of the 20 professional's license or expertise, is sufficient compliance for 21 application of the exemption provided by subsection (1) if the 22 information is provided upon the request of the prospective 23 transferee, unless the transferor has knowledge of a known defect 24 or condition that contradicts the information contained in the 25 report or opinion. In responding to a request by a prospective 26 transferee, an expert may indicate, in writing, an understanding 27 that the information provided will be used in fulfilling the 05788'01 6 1 requirements of section 7 and, if so, shall indicate the required 2 disclosures, or parts of disclosures, to which the information 3 being furnished applies. In furnishing the statement, the expert 4 is not responsible for any items of information other than those 5 expressly set forth in the statement. 6 Sec. 6. If information disclosed in accordance with this 7 act becomes inaccurate as a result of any action, occurrence, or 8 agreement after the delivery of the required disclosures, the 9 resulting inaccuracy does not constitute a violation of this 10 act. If at the time the disclosures are required to be made, an 11 item of information required to be disclosed under this act is 12 unknown or unavailable to the transferor, the transferor may 13 comply with this act by advising a prospective purchaser of the 14 fact that the information is unknown. The information provided 15 to a prospective purchaser pursuant to this act shall be based 16 upon the best information available and known to the transferor. 17 Sec. 7. (1) The disclosures required by this act shall be 18 made on the following form: 19 TOXIC MOLD DISCLOSURE STATEMENT 20 Property Address:________________________________________________ 21 Street 22 _______________________________________ Michigan 23 City, Village, or Township 24 Purpose of Statement: This statement is a disclosure of the pres- 25 ence of toxic mold on the property in compliance with the toxic 26 mold disclosure act to the extent known by the seller. Unless 27 otherwise advised, the seller does not possess any expertise in 05788'01 7 1 construction, engineering, toxic mold detection or abatement, or 2 any other specific area related to the presence of toxic mold on 3 the property or the land. Also, unless otherwise advised, the 4 seller has not conducted any inspection of generally inaccessible 5 areas such as the foundation or roof. This statement is not a 6 warranty of any kind by the seller or by any agent representing 7 the seller in this transaction, and is not a substitute for any 8 inspections or warranties the buyer may wish to obtain. 9 Seller's Disclosure: The seller discloses the following informa- 10 tion with the knowledge that even though this is not a warranty, 11 the seller specifically makes the following representations based 12 on the seller's knowledge at the signing of this document. Upon 13 receiving this statement from the seller, the seller's agent is 14 required to provide a copy to the buyer or the agent of the 15 buyer. The seller authorizes its agent(s) to provide a copy of 16 this statement to any prospective buyer in connection with any 17 actual or anticipated sale of property. The following are repre- 18 sentations made solely by the seller and are not the representa- 19 tions of the seller's agent(s), if any. This information is a 20 disclosure only and is not intended to be a part of any contract 21 between buyer and seller. 22 Instructions to the Seller: (1) Answer ALL questions. (2) Report 23 known conditions affecting the property. (3) Attach additional 24 pages with your signature if additional space is required. (4) 25 Complete this form yourself. (5) If some items do not apply to 26 your property, check NOT AVAILABLE. If you do not know the 27 facts, check UNKNOWN. FAILURE TO PROVIDE A PURCHASER WITH A 05788'01 8 1 SIGNED DISCLOSURE STATEMENT WILL ENABLE A PURCHASER TO TERMINATE 2 AN OTHERWISE BINDING PURCHASE AGREEMENT. 3 1. Are you aware of mold of any kind on or in the property? 4 yes __ no __ 5 2. If the answer to questions number 1 is "yes", answer the fol- 6 lowing questions: 7 (a) Did you take any actions to determine whether the mold 8 was toxic mold, and, if so, what was determined? 9 _________________________________________________________________ 10 _________________________________________________________________ 11 _________________________________________________________________ 12 _________________________________________________________________ 13 _________________________________________________________________ 14 (b) Did you do anything or arrange for anything to be done 15 to contain or remove the mold, and, if so, what was done? 16 _________________________________________________________________ 17 _________________________________________________________________ 18 _________________________________________________________________ 19 _________________________________________________________________ 20 _________________________________________________________________ 21 The seller has lived in the residence on the property from 22 ____________ (date) to ____________ (date). The seller has owned 23 the property since ____________ (date). The seller has indicated 24 above the presence of any molds on the property based on informa- 25 tion known to the seller. If any changes occur in the condition 26 of this property with respect to the presence of mold from the 27 date of this form to the date of closing, seller will immediately 05788'01 9 1 disclose the changes to buyer. The parties shall not hold the 2 broker liable for any representations not directly made by the 3 broker or broker's agent. 4 Seller certifies that the information in this statement is true 5 and correct to the best of seller's knowledge as of the date of 6 seller's signature. 7 BUYER SHOULD OBTAIN PROFESSIONAL 8 ADVICE AND INSPECTIONS OF THE 9 PROPERTY TO MORE FULLY DETERMINE THE 10 CONDITION OF THE PROPERTY. 11 12 Seller___________________________Date __________________________ 13 Seller___________________________Date __________________________ 14 Buyer has read and acknowledges receipt of this statement. 15 Buyer__________________Date ___________________Time: ____________ 16 Buyer__________________Date ___________________Time: ____________ 17 Sec. 8. Copies of the form prescribed in section 7 shall be 18 made available to the public by all real estate brokers and real 19 estate salespersons. 20 Sec. 9. A city, township, or county may require disclosures 21 in addition to those disclosures required by section 7, and may 22 require disclosures on a different disclosure form in connection 23 with transactions subject to this act. 05788'01 10 1 Sec. 10. Each disclosure required by this act shall be made 2 in good faith. For purposes of this act, "good faith" means hon- 3 esty in fact in the conduct of the transaction. 4 Sec. 11. The specification of items for disclosure in this 5 act does not limit or abridge any obligation for disclosure cre- 6 ated by any other provision of law regarding fraud, misrepresen- 7 tation, or deceit in transfer transactions. 8 Sec. 12. Any disclosure made pursuant to this act may be 9 amended in writing by the transferor, but the amendment is 10 subject to section 4. 11 Sec. 13. Delivery of a disclosure statement required by 12 this act shall be by personal delivery, facsimile delivery, or by 13 registered mail to the prospective purchaser. Execution of a 14 facsimile counterpart of the disclosure statement shall be con- 15 sidered to be execution of the original. 16 Sec. 14. A transfer subject to this act is not invalidated 17 solely because of the failure of any person to comply with a pro- 18 vision of this act. 19 Sec. 15. An agent of a transferor is not liable for any 20 violation of this act by a transferor unless any agent knowingly 21 acts in concert with a transferor to violate this act. 05788'01 Final page. DRM