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Legally speaking: Transactions requiring the ‘Residential Property Disclosure’ form

By Lorie Garland, OAR Assistant Vice President of Legal Services

The OAR Legal Assistance Hotline receives an array of real estate-related legal issues — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work “within the law,” we’ve launched a new “Legally Speaking…” feature on the OAR Daily Buzz that will spotlight some of the timely questions that are being asked by REALTORS. This one involves the Residential Property Disclosure form…

We were recently asked if the disclosure form is required in a lease with an option to purchase transaction? The answer is yes.

The form is required in a transfer of residential real property by any of the following methods:

  • Sale;
  • Land installment contract;
  • Lease with option to purchase; or
  • Lease for a term of ninety-nine years and renewable forever.

A transfer occurs when the initial contract for transfer is executed regardless of when legal title is transferred. Therefore, in a lease with an option to purchase transaction, the form would be required to be provided to the lessee prior to execution of the lease option contract.

NOTE: OAR developed two new tools to assist REALTORS in identifying transactions that are exempt from the requirement of using the disclosure form. Click here to access the optional form and chart.

Tags: legal