Oct 14

Real Estate Disclosure - Your new best friend!

REAL ESTATE BEAT    

 Real Estate Disclosure – Your new best friend!
 Written by Bill Barksdale


When you purchase a home and other real property in California you will get a thick stack of paperwork that your agent will go over with you.  I’m not talking about the purchase agreement (that’s thick enough for many home buyers).  I’m talking about the very important disclosures that the State and Federal governments require a seller to present to a prospective buyer, which disclose “material facts” that affect the value or desirability of the property.  Don’t ignore them.  They’re important.  Here’s why.

The first thing your agent will give you (not a property disclosure) is a Disclosure Regarding Agency Relationships.  This will explain the legal relationship between you and your broker.  Your agent is now your fiduciary.  Your attorney, trustee and other important relationships are also fiduciaries with important legal duties to you.  Make sure you understand this relationship.

Next, most 1-4 unit residential property sales require the seller give the buyer a Real Estate Transfer Disclosure Statement.  This mother of all disclosures is designed to let a buyer know what the seller knows about the condition of their residential property.  Of course, the seller may not know everything about the property so a prudent buyer will want to conduct their own inspections such as pest & structural.   The TDS will let the buyer know if anything is not in working condition, any personal property appliances that are being offered (but only included if they are specifically mentioned in the Purchase Agreement), geologic instability, easements or encroachments on the subject property, contamination and other matters.  The State of California requires this disclosure be made for most 1-4 unit residential property sales so if your seller didn’t give you one talk to your agent or attorney.  A TDS, or lack of one, may give the buyer certain legal rights.

A disclosure regarding Lead-based paint and lead contamination is required to be given to a buyer of most residential properties built before 1978.  Since lead exposure can be especially harmful to children and pregnant women, it’s important for buyers to know if the property might have it.  It should be accompanied by the booklet Protect Your Family From Lead In Your Home. This disclosure is given early in the purchase process so the buyer will have time (usually at least 10 days) to inspect the property.

The Natural Hazard Disclosure is required to be given to buyers in most real estate sales in California.  This disclosure informs the buyer whether or not the property is in certain hazard zones including wild fire, flood and earthquake.  Being in one or more of these zones could affect your insurance cost and the property’s value.

The Megan’s Law or data base disclosure puts the buyer on notice that they should check public records to see if any registered sex offenders reside in the neighborhood.  Buyers can contact local law enforcement or go to a web site, www.meganslaw.ca.gov, to get this information.

The Preliminary Report is issued by the title company, usually within about a week after an escrow is opened on a real estate purchase.  It’s VERY important to go over this report carefully to make sure you are aware of easements, seller ownership condition, exceptions to title insurance coverage, the all important legal description of the property and other matters.  If you don’t understand the report, talk with a title officer at the company that issues the report.  You are paying for this service.  Don’t let this one slip.  There are no “stupid questions” about a title report.  Do it!

The Seller Property Questionnaire and Seller Vacant Land Questionnaire are newer California Association of Realtors disclosures that help a seller remember important “material facts” they should mention.  Every seller would be better protected if they used these forms to disclose because buyers would be better informed.  Get them from your agent.

The Statewide Buyer & Seller Disclosure and it’s local companion the Mendocino County Real Estate Disclosure & Advisory are general, but important, disclosures about purchasing real estate in California.  As a buyer, you may not have a clue as to what you should be looking for to protect yourself until you read these.

There are numerous other disclosures that may be required in certain real estate sales.  It’s important for a seller to make the proper ones when required, to avoid problems later on.  Buyers should go over these disclosures at the time they are presented.  Even though there’s a lot of stuff, knowing certain information about the property may determine whether or not this is a good property for you at the right price.  Ask your agent to help you or to recommend appropriate experts.

For sellers I always advise that it’s better to over disclose rather than withhold something that a buyer may find important.  If you have to ask yourself “well should I mention this or not?” then mention it.  If you think going it alone without a good agent is going to save you money, think again.  Not making or receiving proper disclosure may subject to you to very expensive legal action.  Being ethical, honest and thorough benefits both seller and buyer.

In closing it’s important that I mention, I am not an attorney.  Neither I nor any real estate agent who is not also licensed as an attorney is qualified to give legal advice.  If you have legal questions ask a legal expert.  If you have financial questions ask a financial expert.  And finally, don’t just put those important disclosures in an envelope and never look at them again.  Go over them thoroughly while they can still give you legal rights in the context of your purchase agreement, ie your inspection period.  Ask for help to understand if you need it. Be a smart buyer or seller.  Utilize the protections offered by disclosure.  Real estate is still one of the best long-term investments one can make and with both prices and interest rates low, this is “opportunity time”.

ABOUT THE AUTHOR, Bill Barksdale: I have been selling real estate in the Willits/Mendocino Co. market for over 18 years. I can be reached at Coldwell Banker Mendo Realty Inc. PH: 707.459.8888 or Email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . I hope you will find my site (Bill Barksdale's Real Estate Site) of use to your home buying or selling a home now or in the future.

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