Required Disclosures When Selling (22)


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Required Disclosures When Selling (22)

  1. 1. Required Disclosures When SellingThere are certain statutory disclosures including local ordinances and federal laws that a SanFernando Valley seller and/or their San Fernando Valley Realtor must comply with and provide to thebuyer, subject to certain exemptions. These disclosures are required in connection with the sale,transfer or exchange, lease with option to purchase, and ground lease of residential real estate. Thefollowing is a highlight of those disclosures:Transfer Disclosure Statement Exempt TransactionsThe Seller and all real estate agents involved in the San Fernando Valley real estate sale, transfer orexchange of 1-4 units of residential real estate must complete a transfer disclosure statement, anddeliver it to the buyer. The purpose of the statement is for the seller and all Realtors involved in thetransaction to disclose any material facts or defects known about the property that might influence thebuyers decision to purchase the property. It is always best to over disclose. It will help keep everyoneout of court.However, there are certain exempt transactions when a transfer disclosure statement is not required.The following is a list of those exempt transaction under California Civil Code Section 1102:oThe sale of new homes as part of a subdivision project where a public report must be delivered tothe purchaser or a public report is not required. If the new homes are sold through a real estatebroker and not a developer, then the real estate broker has a duty to disclose material facts whichmight affect the value, desirability and use of the property.oForeclosures.oCourt ordered transfers or sales.oTransfers by a fiduciary of a decedents estate, a guardianship, conservatorship, or trust, except inthe case where the trustee is a former owner of the property.oTransfers to a spouse or to children.oTransfers resulting from a judgment of dissolution of marriage, a legal separation, or from a propertysettlement agreement in connection with dissolution of marriage.oTransfers from one co-owner to another.oTransfers by the State Controller for unclaimed property.oTransfers resulting from failure to pay taxes.oTransfers to or from any governmental entity.There are two thoughts on when you should deliver the transfer disclosure statement. In order toavoid your buyer cancelling the contract after execution, you may want to give the buyer a copy of thetransfer disclosure statement at the time you are negotiating the purchase and sale agreement. OtherSan Fernando Valley Realtors suggest that the seller deliver the transfer disclosure statement at thephysical inspection.Natural Hazards DisclosureUnless the property is exempt from disclosure requirements, all San Fernando Valley sellers and/ortheir real estate agents must disclose if the property is in a natural hazards zone such as earthquake,
  2. 2. flood or fire. The disclosure must be made on a statutory natural hazards disclosure statement.Usually, the seller hires a neutral third party who will prepare a report and complete the disclosurestatement. The seller, buyer and their real estate agents must also acknowledge and sign thedisclosure statement.Property Tax DisclosuresThe seller and/or their agent must give the buyer a disclosure statement about supplemental propertytax reassessments and statements and whether there are any mello-roos bonds and taxes ifapplicable.Homeowners Guide to Earthquake SafetyA booklet entitled "Homeowners Guide to Earthquake Safety" must be delivered to the buyer by theseller and/or their Realtor. If the buyer receives the booklet, then the seller or their agent are notrequired to provide any additional information, except of course if the home suffered any earthquakedamage, then it must be disclosed on the transfer disclosure statement.Lead Based Paint HazardsSellers and/or their real estate agents are required to deliver to the buyer a lead based paint hazardsdisclosure form and pamphlet entitled "Protect Your Family From Lead In Your Home," regarding anyhomes built prior to 1978. Buyers have an opportunity to test for lead based paint if they choose tounder the purchase and sale contract. This disclosure also applies to a lease or rental.Smoke Detector ComplianceA smoke detector compliance statement must be provided by the seller to the buyer that the propertyis in compliance with California law pertaining to smoke detectors. New construction requires a hardwired smoke detector with a backup battery one. For existing dwellings, the smoke detector may bebattery operated.California Environmental HazardsThe seller must disclose on the transfer disclosure statement any environmental hazards that theyare aware of that affect the property such as asbestos, radon gas, lead paint, contaminated water orsoil, etc. Also, if the seller or their real estate agent deliver an environmental hazards guide entitled"Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants", then they donot have to give the buyer anything additional other than any applicable disclosures on the transferdisclosure statement with regard to environmental hazards.Mold Disclosure FormAlthough not required by statute, most real estate brokerage firms recommend that the buyer begiven a mold disclosure form. Typically, as part of their physical inspection, the buyer is also given theopportunity to test for mold should mold be discovered. Generally, the physical home inspector willadvise the buyer if they suspect there is any mold and recommend that further mold testing be doneby a mold remediation company. Not all home inspectors conduct mold inspections. It is up to thebuyer to pay for the mold inspection and the physical inspection.Structural Pest Control InspectionState law does not require that a structural pest control inspection and certification be delivered by
  3. 3. the seller to the buyer, unless the contract specifies or the buyers lender requires it. Since a majorityof homes in California have termites, it is recommended that a termite inspection report be given tothe buyer. It is negotiable as to who pays for the report, but generally the seller does.Energy Conservation RetrofitThere are state, federal and local ordinance laws pertaining to minimum energy conservation. Thisincludes retrofitting for low flow toilets and showers. Your San Fernando Valley Realtor can provideyou with the applicable information with regard to your Sherman Oaks, Encino, Van Nuys or NorthHollywood home.Certification Regarding Water Heater StrappingA certification that the water heater is strapped per earthquake code regulations is required to begiven to the buyer. This can be delivered to the buyer with the Homeowners Guide to EarthquakeSafety, in the Real Estate Purchase Contract or Receipt for Deposit, or with the transfer disclosurestatement. It is recommended that the seller have the water heater strapped to code prior to puttingthe house on the market so that this is not an issue at the time of the buyers home inspection.Common Interest DevelopmentsSan Fernando Valley homeowners must provide buyers copies of documents governing commoninterest developments for townhomes, condos or homes in subdivisions if their property is located in acommon development. These documents are generally provided during the escrow period.FIRPTA (Foreign Investment in Real Estate Property Tax Act)Federal law requires that the buyer withhold 10% of the purchase price if the seller is a foreigner.Transactions under $300,000 are exempt if the buyer intends to reside in the property.Franchise Tax BoardIn certain California real estate sale transactions, buyers must withhold 3 1/3% of the total salesprices as state income tax and deliver the sums withheld to the State Franchise Tax Board. Checkwith your tax adviser for exemptions.Buyers Right to TerminateThe buyer has the right to terminate the contract if disclosures are delivered to the buyer after theexecution of the offer to purchase and sale. If the disclosures are personally delivered to the buyer,the buyer has three days from receipt to terminate. If the disclosures are delivered by mail, then thebuyer has five days from receipt to terminate the contract.Real estate disclosure laws are complicated, and sellers should consult with their San FernandoValley Realtor or their attorney to make sure they are in compliance with all state, local and federallaws.real estate sherman oaks