Unit 7 Disclosures in Real Estate: Seller's Statutory Disclosures

As is

The term "as is" means that the seller is not going to fix any of the problems

Comprehensive Loss Underwriting Exchange. CLUE

This report shows any insurance claims that were made on the property within the past 5 years. The report includes the date of the claim, the name of the insurance company involved, policy number, claim number, address, cause of loss, amounts paid, status of the claim, and the name of the insured and the claimant.

Mold

a fungus that reproduces by means of spores. Molds themselves are not toxic or poisonous. However, certain molds are toxigenic because they can produce toxins (called mycotoxins).

Seismic Hazards Mapping Act

addresses non-surface fault rupture earthquake hazards, including liquefaction, lateral spreading, and seismically induced landslides.

Seismic hazard zones

are regulatory zones that the State has determined that a potential for liquefaction or earthquake-induced landslides may affect the property.

Flood Disaster Insurance

as a condition of obtaining financing on most structures located in a special flood hazard area.

stigmatized property

defined by NAR, is "a property that has been psychologically impacted by an event which occurred, or was sus-pected to have occurred, on the property, such event being one that has no physical impact of any kind". The most common properties associated with stigmatized property are murders, suicides, illness, or criminal activity

Flood hazard boundary maps

identify the general flood hazards within a community. They are also used in flood plain management and for flood insurance purposes.

Death

if a death occurs on a property within 3 years and the circumstances of that death are material (gruesome, offensive, or affected the reputation of the property), it must be disclosed.

Federal Emergency Management Agency (FEMA)

in conjunction with communities participating in the National Flood Insurance Program (NFIP), show areas within a 100-year flood boundary, termed special flood zone areas.

Combined Hazards Book

includes all four booklets.By giving buyers this Combined Hazards Book, the disclosure requirement is met.

earthquake fault zone

is an area delineated by state officials to have an active fault within it and have the potential for surface rupture.

area of potential flooding in the event of a dam failure

is an area designated on an inundation map prepared by the state Office of Emergency Services. If the property is on a list of properties posted at the County Public Works/Engineering Offices, Assessors Office, Water Agencies, or Planning Agency, the seller or listing broker must disclose this information to a prospective buyer. If the owner has received federal flood disaster assistance, the seller must tell the buyer to buy flood insurance. This is disclosed on the NHD.

lead-hazard information brochure

must be provided to a buyer or lessee by a seller or landlord prior to becoming obligated under the contract. Also, the presence of any known lead-based paint must be disclosed.

target housing

pertains to residential housing built before 1978 the Act banned lead based paint for residential use in that year.

Alquist-Priolo Earthquake Fault Zoning Act

prevents the construction of buildings for human occupancy on the surface trace of active faults. This Act addresses only the potential hazard of surface fault rupture and is not directed toward other hazards associated with earthquakes.

Residential Environmental Hazards booklet.

to help educate and inform consumers about environmental hazards that may affect real property.

Hazards Discussed in the Residential Environmental Hazards Booklet

•Asbestos: A mineral fiber used in construction materials, which has been found to cause lung and stomach cancer. •Radon: A colorless gas known to cause cancer. Radon can be detected with a spectrometer. •Lead •Formaldehyde: A chemical organic compound found in building materials, which may be a carcinogen •Hazardous waste: Materials—chemicals, explosives, radioactive, biological—whose disposal is regulated by the Environmental Protection Agency (EPA) •Household hazardous waste: Consumer products such as paints, cleaners, stains, varnishes, car batteries, motor oil, and pesticides that contain hazardous components.

Disclosures Included on the SSD

•Death on the property •Methamphetamine contamination or release of an illegal controlled substance on or beneath the property •Industrial use zone location •Military ordnance location •Common interest homeowner's association •Insurance claims affecting the property •Matters affecting title of the property •Undisclosed material facts or defects affecting the property

Requirement: Homeowner's Guide to Earthquake Safety Booklet

•Transfer of any real property with a residential dwelling built prior to January 1, 1960 and consisting of one-to-four units any of which are of conventional light-frame construction •Transfer of any masonry building with wood-frame floors or roofs built before January 1, 1975

Transfers Exempt from the Disclosure Requirement

•Transfers from one co-owner to another •Transfers to a spouse or another related person resulting from a dissolution of marriage, legal separation, or a property settlement agreement •Transfers pursuant to a court order, foreclosure sale, or probate estate sale •Transfers by the state controller for unclaimed property •Transfers resulting from the failure to pay taxes •Transfers from or to any governmental entity •Transfers of the first sale of a newly constructed home in a subdivision, provided a copy of a public report is delivered to the purchaser

Seller/Landlord Obligations

•give buyers/tenants Protect Your Family From Lead in Your Home pamphlet •disclose all known lead-based paint and lead-based paint hazards in the dwelling and provide buyers/tenants with any available reports. •include standard warning language as an attachment to the contract or lease. •complete and sign statements verifying completion of requirements. •retain the signed acknowledgment for three years. •give buyers a 10-day opportunity to test for lead (for sale transactions only)

Supplemental Statutory and Contractual Disclosures (SSD)

(SSD) lists many of the statutory disclosures that sellers are required to give to buyers. When the buyers sign and return this form, they acknowledge that they have received the statutory disclosures

wild land areas

A property located in this area may be subject to forest fires and other hazards. The seller must disclose the possibility of substantial fire risk in such wild land areas and that the land is subject to certain preventative requirements.

title matters

A seller (transferor) or real estate agent involved in the transaction must disclose any known material facts even those not recorded that affect the value or desirability of the property. Whether or not something is deemed material is determined by case law

military ordnance

A seller of residential property (one-to-four dwelling units) located within one mile of such a hazard must give the buyer written notice as soon as possible before transfer of title. This obligation depends upon the seller having actual knowledge of the hazard.

Material Facts that Could Affect Desirability and Value of a Property

Age, condition, and any defects or malfunctions of the structural components and/or plumbing, electrical, heating, or other mechanical systems •Presence of window security bars, with/without any quick-release safety release mechanisms on the bars •Common walls, fences or driveways•Easements or encroachments •Room additions, structural alterations, repairs, replacements, or other changes, especially those made without required building permits •Flooding, drainage, or soil problems on, near, or in any way affecting the property

Visual Inspection

All listing brokers of a residential property and any cooperating brokers must conduct an visual inspection of the property. They must disclose to a buyer all facts that may affect value, desirability, and intended use of the property.

toxic mold.

Currently, standards for judging what is an acceptable quantity of mold have not been established to determine toxicity. Therefore, no special disclosure requirements are in effect for toxic mold.

Registered Sex Offenders (Megan's Law)

Every lease and sales contract is required to include a statutorily defined notice regarding the existence of public access to data base information regarding registered sex offenders in the neighborhood. Seller and brokers are not required to check the website (www.meganslaw.ca.gov)

state responsibility areas.

For areas that are the responsibility of the Department of Forestry and Fire Protection, the department produced maps identifying rural lands

Homeowner Association Information Request form.

If the property is a condominium, townhouse, or other property in a common interest subdivision, the seller must provide the buyer with copies of the governing documents, the most recent financial statements distributed, and other documents required by law or contract of the homeowners' association

Local Option Real Estate Transfer Disclosure Statement (LORETDS)

If there is some local condition, which may materially affect a buyer's use and enjoyment of residential property, an optional disclosure form may be required,

clean-up order

In the event a property is contaminated by an illegal controlled substance, the owner may receive clean-up order from the California Department of Toxic Substances Control (DTSC) or a local health officer. When selling or renting the property, the owner must give a copy of this order to the prospective buyer or tenant.

Caveat emptor

Let the buyer beware

Homeowner's Guide to Earthquake Safety

Listing agents give their sellers copies of the booklet because known earthquake hazards must be disclosed by the seller

AIDS/HIV

Owners and the agents do not have to disclose voluntarily that a person has or has died from Acquired Immune Deficiency Syndrome (AIDS). However, if the transferee (buyer/lessee) asks a direct question about a death on the property, the transferee should direct any specific questions to the transferor in writing

Real Estate Agent Responsibilities

Real estate agents must ensure that: •sellers/landlords are aware of their obligations. •sellers/landlords disclose the proper information to buyers and tenants .•leases and sales contracts include proper disclosure language and signatures .•sellers give buyers the opportunity to conduct an inspection for 10 days or another mutually agreed-upon time

Home Energy Rating System informational booklet (HERS booklet)

Sellers and/or real estate agents may give the optional concerning the statewide home energy-rating program to buyers. The delivery of this booklet is not mandatory

environmental hazard

Sellers must disclose whether they are aware of the presence of substances, materials or products that may be an environmental hazard including—but not limited to—asbestos, formaldehyde, radon gas, lead-based paint, mold, fuel or chemical storage tanks, and contaminated soil or water on the property.

Statutory Disclosures

Sellers must give reports regarding the condition of the property

Red Flag

Something that alerts a reasonably observant person of a potential problem

Natural Hazard Disclosure Statement (NHD).

The NHD warns prospective buyers that certain "hazards may limit their ability to develop the real property, to obtain insurance, or to receive assistance after a disaster."

Real Estate Transfer Disclosure Statement (TDS)

The TDS is a detailed statement telling what the seller knows about the condition of the property.

industrial use of the property

The seller must disclose actual knowledge that the property is affected by or zoned for industrial use of the property. Examples of industrial use disclosure are manufacturing, commercial, or airport use. This information may be disclosed on the SSD form.

Very High Fire Hazard Severity Zone

The seller must disclose if the property is located in this zone. Properties in this zone are subject to property maintenance requirements, such as clearing brush and maintaining firebreaks.

Material facts

The sellers must disclose, in writing, any and all known material facts that affect the value of their property whether the buyers ask or not. Even if a home is sold "as is" in its present condition, the seller must disclose any observable (patent) defects as well as any hidden (latent) defects.