Section 13: Disclosure of Property Conditions

Common electrical problems

-switches that are warm to the touch -lights that burn out frequently or dim when other items are used -burnt out or discolored outlets -faulty appliances -old or damaged circuit breaker panels

What options can a buyer take upon discovering the seller was purposely untruthful in her disclosures?

-terminate the agreement/ask for an earnest money refund - ask seller to make necessary repairs and/or provide a credit to the buyer -sue seller for breach of contract or fraud if transaction has already closed

Common plumbing problems

-water damage on ceilings/walls, - leaking/blocked drains - clogged/leaking toilets -reduced water pressure - soggy ground around the home

What does CLUE stand for?

Comprehensive Loss Underwriting Exchange

Flood Insurance

Insurance that compensates for physical damage to a property by flood. Typically not covered under standard hazard insurance.

MAAP

Material, Adverse, Actual knowledge , Physical. Tells the licensee what to disclose

Caveat Emptor

Seller makes no representations about the property's condition.

Which of these could be signs of flood damage?

Soft or uneven floors

What's the purpose of a CLUE report?

Summarize all insurance claims filed relative to the property within the last seven years

Why are galvanized pipes a problem in older homes?

They can rust and cause leaks and low water pressure

Asbestos

a fibrous mineral naturally found in rocks and soil worldwide

An example of an easement?

a path providing neighborhood access to a pond that cuts through part of Julia's property

Easement

a right to cross or otherwise use someone else's land for a specified purpose.

Common HVAC Problems

air conditioner, furnace, hot/cold rooms, heating & cooling

Shane's buyers learned during the inspection that there was water damage around the fireplace and that the chimney needed new flashing and to be repointed. To whom must Shane disclose that information?

any party to the transaction

Which of the following would a home inspector note as a defect in a report, due to its link to lung cancer?

asbestos tiles in a basement

signs of an underground tank

basement pipe leading nowhere, vents sticking out of the ground

Why should buyers ask sellers of older homes whether they've replaced the wiring system?

because out-of-date electrical wiring can cause a wide variety of problems

Things that may be covered by a home warranty

broken gate or fence leaky faucet crack in foundation improperly hung door

Your home inspector Mason found some discoloration in the attic and near the windows on the second floor. Why does he think this may be a concern?

could be a sign of fire damage

Responsibilities of the buyer's side

counsel buyers that seller disclosures are insufficient for due diligence, follow up on red flags, and obtain home inspection

Which of these items around the fireplace could be a clue that there is a problem?

cracked or sloping firebox or hearth

Common foundation problems

cracks/leaks seperation around garage door misaligned doors, windows, cracked sheetrock

Flashing

damage or water leaks

Shingles

discoloration or curling

Which of these are clues that a property may have been used as a waste disposal site?

discolored soil, soft spots, mounds

Which of the following could indicate a problem with the chimney flue or ventilation?

drafts near the fireplace

Where is lead commonly found?

dust, soil, paint, drinking water, pipes

Justin decided to build a privacy fence around his yard. He thought the fence was along the property line, but it turns out he built it one foot inside his neighbor's property. What will an inspector document as existing on the neighboring property?

encroachment

National Flood Insurance Program (NFIP)

established to help homeowners in flood hazard areas obtain insurance

What are some actions that homeowners can take to protect their homes from wood-eating pests?

examine home, hire a professional

The buyers paid for the inspection, and the inspection report is thus the property of the buyers. Their agent can't provide copies of the report without

first obtaining permission

______ around pipes, vents, or other protrusions is a prime spot for roof damage or water leaks.

flashing

Basement wall cracks and leaks can be indicators of ______ problems.

foundation

Buyers should know what they're getting into by determining lot size, as well as any easements or encroachments that exist. How can they determine this?

have a survey performed

How can you determine whether there is asbestos in a home?

hire an accredited individual to test for asbestos

For which properties would a lead-based paint disclosure be required?

homes built before 1978

Encroachment

intrusion of some structure or object across a property's boundary line

advantages of tax abatement

lowers taxes

Most often, what's the first course of action for disputed home warranty claims?

mediation

What two environmental conditions are prime for mold growth?

moisture & lack of air circulation

Property Condition Disclosure Statement

must name any known material facts that would affect a buyer's decision to buy a property

Tanks that are not decommissioned properly or those that leak can cause problems, including groundwater contamination. What other items can lead to groundwater contamination?

nearby mining activities, nearby landfill, agricultural pesticides, & faulty septic systems

What about asbestos is true?

no amount of it is considered safe

Fireplace and chimney problems can be costly. What items could be indicative of an issue?

no recent inspections & creosote stains on outside of chimney

In which two locations are underground storage tanks likely to be found, and for which uses?

older homes to store heating oil, & commercial or industrial buildings to store chemicals

disadvantages of tax abatement

potentially significant increase in taxes after the abatement period ends, unclear picture of what actual tax costs will be, area where an abatement is in place may not be a prime location

What issues would be disclosed in a disclosure of property conditions statement?

presence of lead-based paint, flooding damage, age of property, & presence of termites and rodents

What's the greatest benefit that the property condition disclosure statement provides to home sellers?

property disclosures protect the seller from liability and potential legal action

What good is a room with a view if that room is full of water because it's in a flood zone? There are certain locations that may cause issues. Which of these may be an issue?

property located in flood zone property is located in conservation area property is a registered historic building property borders a wetland

property tax abatement

property taxes may be reduced or eliminated for a given number of years

When a buyer finances a newly built home with a Federal Housing Administration loan, what does the FHA require the builder to do?

purchase a third-party home warranty to protect the buyer

Homebuyer Nancy has made an offer to purchase a house and has plans to schedule a home inspection. How can her agent assist her in relation to the home inspection?

review the inspection report & discuss options

You may come across items containing asbestos when looking at older properties. Which of these items could contain asbestos?

rock & soil, flooring, walls, heating systems, roofs

Full disclosure

seller must proactively disclose any known defects

Seller caveat emptor state

seller need not disclose unless asked by buyer

Full seller disclosure

sellers must disclose the condition of all items on a seller disclosure form, plus any known material defects not listed on the form

Common roof problems

shingles, gutter, flashing

What could be a clue that a property was formerly a waste disposal site?

soft spots, mounds, discolored soil

Radon is typically found in a couple of places. where would you possibly find radon?

soil & private wells

what do inspections focus on?

structure, operating systems, & major elements that make up a house

A buyer who discovers after closing that a seller wasn't honest about the property condition on the required disclosures can _____.

sue the seller

pest infestation signs

termites, beetles, carpenter ants

In caveat emptor states, which party carries the burden related to a property's condition?

the buyer

All of the homes on Elm Street are currently on septic systems. However, the county plans to extend the sewer lines to Elm Street within the next two years. What's the biggest reason why it's important for your buyers to know this?

the county will likely impose an installation fee on Elm Street residents to cover costs

A prospective buyer is curious why a previous owner is selling such a perfect home. The licensee knows that the previous owner recently died due to complications from AIDS. How should the licensee respond to the prospective buyer's inquiry?

the licensee can't disclose that a previous owner had HIV or AIDS

The seller disclosure indicates that the central air conditioning unit is 26 years old. Why might this worry Margot's buyers?

the unit may need to be replaced

Darren and Natalie are first-time buyers who have decided to purchase a newly built townhouse. Their agent, Jenner, tells them that the builder must provide a one-year home warranty. Which of the following conditions is most likely true?

they are using an FHA-insured loan

Purpose of a home warranty

to protect the buyer in the event that certain defects or adverse actions occur

Purpose of a home inspection

to provide the buyer with a true picture of a property's condition

Disclosing that a previous owner or resident had HIV or AIDS is a fair housing violation.

true

Easements and encroachments are considered material facts

true

In caveat emptor states, buyers will usually identify easements and encroachments while doing due diligence.

true

Gutter

water build-up & ice damming

What are common issues related to windows that an inspector might note in an inspection report?

window that won't stay open, damaged seal

Paul and Blake are touring an open house when they notice that the glass on the sliding patio door is very foggy. Is this a concern, and if so, why?

yes, this is a sign of a leaky seal which reduces efficiency