12/14/10: Beware Of Bedbugs

Housing Counsel

By: Benny L. Kass

Q: I am trying to sell my condominium unit and have just learned that some of our units have bedbugs. Obviously, this is a real concern. Do I have to disclose this information to prospective buyers? I want to be honest, but I also want to sell and don’t want to scare people away.

A: Since you did not advise me where you live, I will have to respond by giving you information in all three Washington metropolitan jurisdictions.

When a developer sells a condominium unit, prospective purchasers must be given a document known as a Public Offering Statement. This includes such items as a brief description of a condominium, the legal documents (Declaration and Bylaws), a sample sales contract, the proposed budget, and the plats and plans for the association. Buyers in Maryland and the District of Columbia have 15 days after receipt of this document to cancel their contract and get a full refund of their earnest money deposit. In Virginia, the law only gives buyers a 10 day right to cancel.

But when an existing condominium owner wants to sell, prospective buyers must be provided with two different disclosure documents: a resale package from the association, and a seller’s disclosure statement.

Let’s look at these two documents.

Resale Package: in general, all three jurisdictions require that the association provide such information as the amount of reserves available, the current budget, projected expenses for the current and next year, and a copy of the most recent budget. Potential buyers must also be given copies of the current legal documents. Once the buyer gets this material, he has 3 days in which to cancel the contract if the property is in the District of Columbia or in Virginia, and 7 days for Maryland properties.

Seller disclosure: there are also requirements that the seller must disclose certain information about the unit itself. Each jurisdiction has forms that must be completed and provided to potential buyers before they sign a sales contract. In the District, full disclosure is required. In Maryland and Virginia, sellers have the option of either disclosing or disclaiming. To disclaim means that the property is sold “as is” – with all defects which may exist – and does not wish to make any disclosures.

Unfortunately, even when sellers decide to provide full disclosure, the forms only ask about wood boring insects, and not bedbugs.

Although these little critters have been around for a long time, after World War II they were eradicated with the use of a pesticide known as DDT. However, on December 31, 1972, because it is such a toxic chemical, DDT was permanently banned from use in the United States.

As a result, bedbugs have returned, and in force. According to statistics from the New York city hotline, it received over 11,000 complaints about bedbugs in 2009 as compared to only 537 in 2004.

The city responded. Effective August 31, 2010, residential property owners or their managing agents who rent apartments must give prospective tenants a notice indicating the property’s bedbug infestation history during the preceding 12 months. While this law does not apply to condominium associations, it is applicable to cooperative housing projects.

You have learned that there are bedbugs in some of the units. What should you do about this and what should you disclose to your potential buyer?

First, I would ask your association property manager what action – if any – has been taken to address this problem. From my research, I have learned that it is not easy to eradicate them, and professional pest-control companies should get involved. Has the association engaged any such companies, and if so, what success have they had.

I would also inquire whether the property manager has contacted those owners who have the problem. There are a number of self-help remedies that can be used in conjunction with the professional companies, such as filling in cracks in floors, walls and molding, using a powerful vacuum all around the unit, and even encasing mattresses within special bags that are designed to keep the bugs away.

Legally, you do not have to disclose that other units have these bugs. As indicated above, in some states you can refuse to provide any disclosures, and in the District you only have to report conditions about your individual unit.

But practically, how would you feel if you were a buyer, and learned – after settlement – that the complex was infested?

Accordingly, my advice is to make absolutely sure that the property manager as well as the individual unit owners are addressing these issues. Once you have this assurance, you should advise your buyers that there is a problem in other units, but that proper corrective treatment is underway.

I know that property managers and board presidents will claim that this is not a condominium association problem. That may be a valid position if only one unit is involved, but if there are multiple units with bedbugs, then I believe this is a problem which must be addressed by the association.

Why? There are several reasons. First, the bugs come from outside, and enter through common element walls. Second – and perhaps more importantly – if the board does not take action, you may have different owners using different companies to resolve the problem. And if the bugs are told to leave one unit, they will definitely decide to invade the next door property.

Bedbugs have been called “domestic terrorists” by some commentators. It is a major problem that cannot be conveniently shoved under the rug – since that’s where the bugs are hiding.