Zillow’s non-standard property disclosure statement

QUESTION: One of my agents just submitted an offer on a Zillow-owned home. Zillow’s agent instructed my agent to check the box in paragraph 5(d) of Form 2-T stating that the  transfer is exempt from the requirement to furnish the North Carolina Residential Property and Owners’ Association Disclosure Statement (the “RPOADS”) and to state as the reason an addendum that Zillow has created called the “North Carolina Terms & Conditions Addendum.” Zillow has asked our client to sign that addendum and wants us to then reference the  addendum in paragraph 14 of the contract. The Zillow addendum references a non-standard 12-page disclosure statement completed by the prior owner of the property. The addendum states that the buyer agrees to accept that non-standard disclosure statement, and waive any right to receive a completed RPOADS. Is Zillow’s request legal? Is our client required to  sign the Zillow addendum and forego receipt of the RPOADS?

ANSWER: While it may be unusual, there is nothing illegal about Zillow’s request. The Residential Property Disclosure Act includes a provision that allows the parties to a transaction to agree that a RPOADS will not be required (interestingly, the Act does not permit parties to waive the Mineral Oil and Gas Rights Disclosure Form). However, just because Zillow asks  your client to sign an addendum waiving certain rights does not mean that your client has to do so. If your client insists on receiving the standard RPOADS, he or she can certainly  refuse to sign the Zillow addendum. However, Zillow may then decide to reject your client’s offer.

What should your client do? We have reviewed the Zillow forms and believe that they are likely to provide more information to your buyer client than the standard RPOADS. Why?  Because Zillow does not occupy the houses it purchases and re-sells. If Zillow were to complete a standard RPOADS, it would almost certainly check all of the “no representation”  boxes on that form.

According to Zillow’s “Disclosure Statement Explanation,” each time Zillow acquires a property, it requires the seller to complete a disclosure form that it describes as “more comprehensive than the North Carolina form.” That description is accurate. Zillow’s form does not include any “no representation” boxes. Questions about the property must be  answered “yes” or “no”. Sellers are instructed that they should not leave any spaces blank. Therefore, if your client signs the Zillow addendum, he or she will receive answers to 12  pages of questions about the house they want to purchase. While the information may be dated (it was completed by the prior owner, not by Zillow), it is better than receiving no  information at all.