Real Estate 100 - Chapter 4 - Real Estate Disclosures
There are three parts of AVID. What are they and what is described in each section?
The three parts of AVID are: 1. Part I - This includes stuff that was not included in an agents visual inspection and explains what the agent will inspect but it tells the buyer what the agent will not inspect. 2. Part II contains a list of rooms or areas of the property for the agent to record any red flags discovered in those rooms. 3. Part III provides additional room for the agent to complete their report as well as comment on the condition of the exterior of the property.
What are the reporting disclosure points on stigmatized properties?
These properties should be disclosed to the buyers i.e., used in TV shows, or a celebrity house may be considered stigmatized and may event in causing a loss in value to the property should be disclosed.
What happens if sellers are exempt from TDS with regards to water heater bracing, smoke detectors and carbon monoxide detectors?
Those sellers who are exempt from TDS disclosures with regards to water heater bracing, smoke detectors and carbon monoxide detectors still must make a separate disclosure.
Who are exempt from providing a notice of disclosure regarding natural hazards?
Those who are exempt from providing a notice of disclosure regarding natural hazards are those who do not have to provide a TDS if they are not within the aforementioned hazard zones.
What should be disclosed re lead based paints?
Under Federal law, buyers and tenants of properties constructed prior to 1978 must be given a lead based paint notice prior to purchasing or renting a residential property.
Who are not required to complete a TDS or under what circumstances?
Under certain circumstances sellers are not required to complete a TDS, but must still disclose any material facts known to them about the property. Such circumstances are related to lenders selling foreclosures and court supervised sales: A. Lenders who have foreclosed on or have taken the property back with a deed in lieu of foreclosure B. Estates in probate or under a testamentary trust C. Trustees under an irrevocable trust D. Trustees conducting a judicial foreclosure E. Non judicial foreclosures under a deed of trust F. Bankruptcies, conservatorships and guardianships.
What needs to be disclosed under Condominium or Planned Units Developments?
Under planned unit developments or condominiums, and subject to a home or property owners association need to be disclosed to potential buyers. Under Civil Code 4525 requires the provision of copies of financial statements and contact information for the owners association.
Should homes be tested for radon gas?
Yes, homes should be tested for radon gas and real estate professionals should recommend that homes be tested for the presence of the gas as part of the buyer's inspection.
What is a TDS?
A TDS (Transfer Disclosure Form) details various facts about the property, needed repairs, the condition of the applicances and improvements added with or without building permits, and the existence of any known harmful substances.
Who gets noticed regarding a supplemental tax bill?
A buyer must be informed regarding a supplemental tax bill via "the Notice of Your Supplemental Tax Bill." The reason for this is the first tax bill would only include what the current seller was paying based on the assessed (sales) value at the time of original purchase. A buyer purchasing the property who pays above the original sales prices will be assessed property taxes on the new value. This supplemental tax bills will be difference of the original value and the new value based on the sale.
When does a carbon monoxide detector have to be installed in a house and then the subsequent disclosure on the TDS?
A carbon monoxide detector has to be installed when a home contains a fossil fuel source (gas or propane). A home that does not have a fossil fuel source is exempt from this disclosure.
What must a contractor be if he would be removing lead based paints in a house?
A contractor must be certified , test for the presence of lead paint and follow strict lead-based pain contamination procedures in dealing with any lead debris if an owner hires a contractor to disturb more than six square feet of wall in a pre-1978 constructed house
When must a formaldehyde disclosure be made?
A formaldehyde disclosure must be made if the owner knows that formaldehyde form was pumped into exterior walls through holes bored near the ceiling joice for insulating materials.
What is a material fact?
A material fact can be defined as something that affects the value of the property.
How does a property become compliant with regards to a water heater?
A property becomes compliant with water heater bracing or anchored so that it does not fall down during an earthquake.
What must a seller do if there was methamphatamine production on the property?
A seller must disclose to the buyer prior to the transfer of the property if there was any meth production on the property because this might create soil contamination
What are sellers required to issue in a disclosure report called the Natural Hazard disclosure (NHD) statement regarding possible natural hazards?
A seller must report the following regarding natural hazards: 1. If the property in a flood area i.e., 100 year flood plain or where flash floods can occur. 2. Is the property in an area of potential flooding or an inundation area. This would refer to areas where a dams walls could fail and cause water damage. 3 Some areas of California are not covered by a municipal, county fire department or a fire protection district 4. Is the property in an earthquake fault zone 5. Is the property in a seismic hazard zone i.e., is the area prone to soil liquefaction?
What should a seller purchase if they don't know if they are in these hazard zones?
A seller who has no knowledge of these hazard zones would be wise to purchase state maps identifying these zones and should purchase a NHd report from a commercial provider.
Who's signs the AVID forms?
AVID forms are completed by each agent making the inspection and each reported separately on a separate form. The form is then signed by both the seller and the buyer in the transaction as well as each agent representing the parties..
What is AVID?
AVID is a form from the CAR called the Agent Visual Inspection Disclosure Form which is a three page form for agents to disclose their inspection findings.
How many smoke alarms are usually required in a home?
All California properties are required to have at least one smoke alarm and the number would depend on the building code that was in effect at the time the house was constructed. The current building code requires smoke alarms on each floor and in every sleeping area.
When must agency disclosure be confirmed?
An agency disclosure and confirmation must be confirmed in all single family (one-four) residential unit transactions
What does California law also require regarding gas/ hazardous liquid pipelines ?
California law requires the notification of potential existence of gas and hazardous liquid transmission pipelines be disclosed to buyers. This information is in the current CAR Purchase Agreement..
Where are carbon monoxide detectors usually located?
Carbon monoxide detectors usually are found plugged into an electrical outlet close to the floor of the property.
When does death on a property have to be disclosed?
Death on a property has to be disclosed if it occurred less than three years ago. Also deaths from homicides, murder and suicide should also be disclosed. You usually don't have to disclose the cause of death i.e., AIDS because that would be confidential information and may be covered under the Fair Housing Act and the Unruh Civil Rights Act.
If the seller carriers the financing on a sale, what must be stated?
If a seller carries the financing of a sale, the seller must have a statement clearly outlining all the financial terms and conditions and must be signed by the buyer, seller and the real estate agent. This statement must be signed before the buyer signed the promissory note and other critical loan papers.
How many days does the buyer have to look at the TDS and sign off?
If the TDS is given to the buyer after the purchase contract has been signed, the buyer has a three day right to cancel. If mailed, the buyer has a 5 days in which to rescind the contract.
In California, what disclosure form must be provided to the buyer?
In California, sellers of 1-4 residential units must furnish buyers with a completed Transfer Disclosure Statement(TDS)
What is Megan's law?
Megan's law is an online database available to screen for registered sex offenders. This disclosure is included in the CAR residential purchase agreement. Agents should direct any questions regarding the website to http://www.meganslaw.ca.gov
Where does mold grow? Is this a defect and reportable?
Mold grows where there is a food source and water and is typically found in humid, warm, dark conditions in a property. Yes, it is a defect and must be reportable or disclosed.
What other information does an NHD report disclose?
Other information an NHD report discloses whether a property is subject to Mello-Roos Community district and/or a 1915 Bond Act assessment. Both of these assessments are used for public property improvements such as schools, parks, roads etc.
Aside from the normal material facts like a leaky roof and broken appliances what other unusual material facts could be mentioned?
Other unusual material facts affecting the value of a property could be a neighbor's barking dog, traffic caused by the elementary schools, or noise from a neighborhood park.
Is an agent required to make a visual inspection?
Per California law, Civil Code 1102, all agents involved in a transaction are required to make a diligent visual inspection of accessible areas and disclose to the buyer any item that could be a material fact.
What needs to be reported on Ordinance Locations?
Properties within one mile radius of any federal or state ordinance location must be disclosed to buyers prior to the transfer.
What is radon gas?
Radon gas is a colorless, odorless radioactive gas that can be released from rock beneath the ground and is usually found where there are large amounts of granite rock.
What must be disclosed if the property is in an Industrial Use zone?
Residential properties adjacent to an Area that allows for manufacturing, commercial or airport uses must be disclosed to buyers prior to the property being transferred and the existence of the nuisance must be disclosed.
What are some residential environmental and earthquake hazards disclosures?
Some residential and environmental hazards disclosures include: A. Earthquake issues B bracing a water heater C. Bolting down foundations D. Unreinforced masonry E. hazardous wastes F. Asbestos G. Formaldehyde H lead paint I mold J radon gas
When should the TDS be given to the buyers?
The TDS ideally should be given to the buyers before they sign the purchase contract.
Who signs the TDS?
The TDS must be signed by the buyers, the sellers and all the real estate agents involved in the transaction.
Who gets the booklet entitled Environmental Hazard and Earthquake Guide?
The buyer is given a booklet entitled Environmental Hazard and Earthquake guide as part of disclosures.
What are the four parts of the TDS?
The four parts of the TDS are: 1. Used by the seller to disclose any previous inspections or reports on the property. 2. Part II asks the following: A. Asks the seller to identify any items that the property contains and then whether these are in proper working order. This does not mean that the seller has to repair the items but disclose just the condition. Also, the seller is not required to inspect their own property to determine if any of the items are not in proper working order. ' B. Asks if the property has any structural problems and a series of boxes are listed for the seller to check. If any defects, the seller must explain C. There are a series of questions where the seller answers yes or no. If yes, the seller must explain 3. Part III may be used by the listing agent to report what material facts they are aware of following a discussion with the seller and conducting a reasonable diligent visual inspection of the accessible areas of the property. 4. Part IV may be used by the selling agent to report what material facts they are aware of, after conducting a reasonable diligent visual inspection of the accessible areas of the property.
Who makes a property inspection for the TDS?
The listing agent involved must inspect the property and make his comments on the TDS. The seller actually must compete the TDS.
