Back in the “good old days”, around the year 2005, home prices were escalating very rapidly. Home buyers had to make almost instant decisions on whether or not to buy a particular home, because if they hesitated for even a few hours, they would often find that someone else had already purchased the home. Another thing we saw happening back then were informal auctions, where two or more potential buyers would start making higher bids on a home to find out who was willing to pay the highest price. The home sellers loved it!
Unfortunately, with that mad buying pace, home buyers didn’t pay much attention to sloppily prepared home sales disclosure forms. They weren’t as concerned about that stuff because they were just happy to own a home in a market where prices were rising monthly.
Today’s world is a lot different. Home prices have plunged since 2006 and they are still declining in many areas. Couple that with all of our economic problems and you can easily understand why home buyers, today, are much more likely to file a claim against home sellers if they find that the sellers were less than candid with their disclosures.
The State of California has very stringent disclosure requirements. Home sellers must fill out and provide the buyers with a disclosure form that list a broad range of defects – such as faulty electric wiring or termite damage.
The form will ask if you are aware of any substances, materials or products which may be an environmental hazard. Asbestos and lead-based paint are two of the most common issues that concern buyers and sellers.
You are required to state if there are any room additions, structural modifications or repairs made without permits and they want to know if all of these meet current building codes.
Here are some of the other items that are asked on the form:
- Has there been any settling, slippage or other soil problems?
- Are there flooding, drainage and grading problems that need to be documented?
- Has the home had major damage from fire, earthquakes or flooding?
- Are there any zoning violations, nonconforming uses or violations of “setback”?
- Are you aware of any neighborhood noise problems or nuisances, such as barking dogs?
California requires that you report if any deaths have occurred on the property within the past three years. Potential hazards from floods, earthquakes, fires must be disclosed in a “Natural Hazard Disclosure Statement”. And, don’t forget to alert buyers to the availability of a database maintained by law enforcement authorities on the location of sex offenders.
Filling out these forms is time consuming and may feel like drudgery. However, dealing with after-closing claims will be far more time consuming and the added cost could be devastating.
What Can Happen If You Don’t
Disclose Everything You Should?
We are currently involved with a case where a home seller was allegedly less than candid about the condition of his home. The buyer purchased the home and later discovered there were major construction problems. An attorney was hired by the buyer and at last word, they are estimating close to $700,000 in damages! A lawsuit like that, my friend, will ruin your day!
If You Are Selling Your Home,
Always Err On The Side Of Disclosure!
Take your time and fill out these forms as accurately as possible and you should always err on the side of disclosure. If you aren’t sure about how to correctly fill them out or what to say, we strongly suggest you seek advice from a real estate attorney.
You may also want to consider hiring a qualified home inspector to evaluate your home before you put it on the market. If problems are found during the inspection, you then can decide on how to deal with them. The inspection will also assist you in filling out your disclosure forms.
We strongly recommend that you order a termite inspection, as well. And, if you get more than one opinion, make sure that you disclose copies of everyone of these termite inspection reports to the buyer. Some sellers only present the one they like (usually the cheapest bid) and throw the rest out. Please keep in mind that termite inspection reports are filed with the State, they are kept on public record for three years and anyone can contact the State and get a copy.
Are you considering selling your home and need a termite inspection? Call our office at (949)631-7348 or click on order form and we’ll schedule an inspection at your convenience.
