Property Sellers Have New Requirements in 2002

"This law poses a substantial risk of noncompliance upon homeowners and commercial property owners, who may occasionally buy and sell real property but do not have occasion to maintain the sort of records contemplated by this law in the ordinary course of their affairs," states Baker in a note to clients. "Failure to comply with any of these requirements is a misdemeanor that may result in a $2,000 fine and up to six months in jail! This law, with its penalty, applies to all sellers, including professional developers, commercial property owners and homeowners."

Baker writes that the new law will require real property sellers to provide their purchasers with a list identifying any construction contract or design professional who worked on the property for the seller, who claims (or claimed) that they were not fully paid: The seller is required also to provide copies of all lien notices, claims, releases and foreclosure pleadings received within the same time period. Finally, the seller is required to provide the purchaser with a notice, on a form prepared by the Construction Contractor's Board, notifying the purchaser that a lien may be claimed for construction activity occurring before the sale.

Even though the right to file a construction lien expires if it is not recorded within 75 days after the work stops, Baker states any seller could be subject to these criminal penalties for failure to keep or to disclose any of these documents, even if no claim is ever made against the purchaser's interest.