Chapter 15: Condition of property: the seller's disclosures
The seller of a one-to-four unit residential property must complete and deliver to a prospective buyer what statutory form? Transfer Disclosure Statement (TDS) is aka generically called?
Transfer Disclosure Statement (TDS) Condition of Property Disclosure Statement 1 [See Figure 1, RPI Form 304]
If the TDS is belatedly delivered to the buyer — after the buyer and seller enter into a purchase agreement — the buyer may ___________ the purchase agreement under a statutory three-day right to cancel. The buyer's statutory cancellation right runs for three days following the day the TDS is actually handed to the buyer (five days if delivered by mail)
elect to cancel
Unless a seller is __________,, sellers of one-to-four unit residential real estate are required to fill out and furnish buyers with a statutory TDS when entering into a purchase agreement.
exempt
A ______________ often detects and reports property defects overlooked by the seller and not observed during a visual inspection by the seller's agent. Significant defects which remain undisclosed at the time the buyer goes under contract tend to surface during escrow or after closing as claims against the seller's broker for deceit. A home inspector troubleshoots for defects not observed or observable to the seller's agent's eye.4
home inspector
Condition of Property: the Seller's Disclosures, Part II (5:15)
https://www.firsttuesday.us/course/7050.cfm
Condition of Property: the Seller's Disclosures, Part I (6:21)
https://www.firsttuesday.us/course/7479.cfm
Any conditions known to the seller which might ____________ the value and desirability of the property for a prospective buyer are to be disclosed, even though they may not be an item listed on the TDS. Disclosures to the buyer are not limited to conditions preprinted for comment on the form.
negatively affect
If the seller will not voluntarily cure the defects on demand, what may the buyer do?
the buyer may close escrow and recover the cost incurred (or valuation lost) to correct the defect without concern for the purchase agreement contingency provision stating the alternative statutory right to cancel the transaction. Defects known and undisclosed, or inaccurately disclosed, by the seller or the seller's agent at the time the seller accepts the buyer's purchase offer impose liability on those who knew or are charged with knowledge.
A seller's agent (or seller's broker) is obligated to personally carry out a competent ___________ of the property. The seller's disclosures and defects noted in the HIR are entered on the TDS and reviewed by the seller's agent for discrepancies. The seller's agent then adds any information about their knowledge of material defects which have gone undisclosed by the seller (or the home inspector).
visual inspection
Also, the buyer cannot waive delivery of the statutorily-mandated TDS. Any attempted waiver, such as the use of an "as-is" clause in the purchase agreement, is _______ as it is against public policy.
void
Transactions which exempt the seller (but not the seller's agent) from preparing and delivering the statutory TDS to the buyer include transfers:
• by court order, such as probate, eminent domain or bankruptcy; • by judicial foreclosure or trustee's sale; • on the resale of real estate owned property acquired by a lender on a deed-in-lieu of foreclosure, or by foreclosure; • from co-owner to co-owner; • from parent to child; • from spouse to spouse, including property settlements resulting from a dissolution of marriage; • by tax sale; • by reversion of unclaimed property to the state; and • from or to any government agency
The TDS is handed to the buyer before the seller accepts a purchase agreement offer submitted by a buyer. If the TDS is delivered to the buyer after the seller enters into a purchase agreement, the delivery is untimely in violation of TDS rules, and the buyer may:
• cancel the purchase agreement on discovery of undisclosed defects known to the seller or the seller's agent and unknown and unobserved by the buyer or the buyer's agent prior to acceptance;3 • make a demand on the seller to correct the defects or reduce the price accordingly before escrow closes [See RPI Form 150 §11.2]; or • close escrow and make a demand on the seller for the costs to cure the defects.4
Chapter 15 Learning Objectives (3):
1.) affirmative duty seller and seller's agent have to inspect and disclose their observations and knowledge about property's condition to a prospective buyer 2.) general duty of seller and seller's agent owed to prospective buyers to prepare a Transfer Disclosure Statement (TDS) presenting known conditions of property improvements with an adverse effect on value and hand it to a buyer or buyer's agent before the seller enters into a purchase agreement 3.) role of a home inspection report (HIR) to identify and disclose property conditions as a warranty of the property's condition
Chapter 15 Key Terms (2):
1.) home inspection 2.) home inspector
A buyer has ________ years from the close of escrow to pursue the seller's broker and agent to recover losses caused by the broker's or agent's ________ to disclose observable and known defects affecting the property's physical condition and value. Undisclosed and unknown defects permitting recovery are those observable by a reasonably competent broker during a visual onsite inspection. A seller's agent is expected to be as competent as their broker in an inspection.5
2 years ; negligent failure
What is a home inspector?
A professional employed by a home inspection company to inspect and advise on the physical condition of property improvements in a home inspection report for reliance by the seller, the seller's agents and the buyer as a warranty of the condition of improvements
When preparing the TDS, what must the seller set forth?
Any property defects known or suspected to exist by the seller
What is home inspection?
Non-invasive exam of mechanical, electrical & plumbing systems of a dwelling & components of the structure, such as roof, ceiling, walls, floors & foundations.