With ever increasing mandatory disclosure obligations being placed
on sellers of real estate, it can be difficult to keep up with new requirements. We no
longer live in a society of caveat emptor (let the buyer beware). The most prudent course
of action, is of course full disclosure. This way an informed buyer can make their buying
decision with all the known facts at hand. Your real estate agent is the best
source for the proper disclosure that is required in your particular geographic location.
Examples of the more common disclosures are:
TDS (Transfer Disclosure Statement)
– The law requires a seller to provide prospective buyers with a written disclosure
statement covering such items as appliances, structural defects and modifications,
possible easements, neighborhood problems and other material fact that may affect the
principal’s decision in a transaction.
Natural Hazards Disclosure Law –
The Natural Hazards Disclosure law requires the seller or seller’s agent to disclose
whether the property is located in the following six zones:
Flood Hazards Disclosure Law –
Areas subject to unusual flood risks
Inundation Zones – Areas subject to
potential flooding in the event of a dam failure
Very High Fire Hazard Severity Zones
– Areas where property owners may be obligated to undertake specific maintenance
duties
Wildland Fire Areas – Areas wherein
the state has responsibility for fire suppression
Earthquake Fault Zones – Areas
located a certain distance from earthquake fault line
Seismic Hazard Zones – Areas
subject to unusual ground movement during earthquakes
Lead Paint Disclosures – The law
requires both sellers and lessors to disclose known lead hazards by providing an
informational booklet and a disclosure form as addenda to the purchase contract or lease.
The federal lead paint disclosures apply to leases and sales of residential property,
including mobile homes, constructed before 1978.
Mello – Roos Districts – This
law requires a seller of real property to disclose to a prospective buyer that the
property is located in a Mello-Roos district. A Mello-Roos district is one in which
special taxes are levied against property owners within the area to finance various public
services, such as police and fire protection and facilities like schools and libraries.
Homeowners Guide to Earthquake Safety
– Informational booklet designed to help property owner’s spot and correct
earthquake related concerns. A seller must deliver the "Homeowner’s Guide"
if the property consists of one to four residential dwellings, was built prior to January
1, 1960, and is of conventional light frame construction.
Megan’s Law – Megan’s Law
was enacted to notify buyers and tenants about the proximity of registered sex offenders.
The law requires every purchase contract and lease agreement to contain specific written
notice that a database containing information about registered sex offenders may be
accessed by buyers and tenants. This disclosure is required for every lease or real
property sales contract for residential real property entered into on or after July 1,
1999.
Military Ordnance – Disclosures
involving the location and proximity of any military ordnance sites.
Water Heater & Smoke Detector Statement of
Compliance – California law requires that hot water heaters be securely
strapped to prevent toppling over in an earthquake. Installed smoke detectors are required
outside of bedroom doors. All residential transactions require these be accomplished prior
to closing.
Known Hazardous Substances on the Property
– State law requires that disclosure of known environmental contamination or hazards
on a subject property be made to prospective buyers. Environmental contamination could be
a private underground fuel or heating oil tank that has leaked.
Environmental Hazards Disclosure Booklet
– State mandate required that the California Departments of Real Estate and Health
Services prepare a booklet to explain and discuss the most commonly found environmental
hazards affecting residential property. This booklet is designed to provide general
information on asbestos, formaldehyde, lead, radon, and hazardous waste. Delivery of this
booklet to prospective buyers is not required but is recommended.
Neighborhood Environmental Contamination
– The potential for hazardous substance contaminated sites in the vicinity of
residential property could be anything from a local gasoline station with a leaking
underground fuel tank to an industrial site. Disclosing the environmental information that
is reasonably available today acknowledges that buyers may have questions over the
uncertainties environmental contamination issues present.
Real estate agents and sellers are being held too ever more
stringent and higher standards of care. The number one claim on Errors & Omissions
Insurance is "failure to disclose" some item that a buyer felt was material.
Although there is no way to completely prevent lawsuits, there are some general guidelines
to help protect against non-disclosure liability. Make all disclosures in writing and
obtain acknowledgement signatures.
If there is any doubt, disclose, disclose, and disclose.
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