3 Credit Continuing Education Course

1. P R E S E N T S
Minimize Your RiskMinimize Your Risk
Maximize Your EarningsMaximize Your Earnings
Understanding and Recognizing
the Top 10 Property Conditions*
that most often lead to disputes
*According to the NAR Legal Scan

2. …and a great class!
Continuing Education Providers
are subject to audit by the State of Connecticut
Please:
Mute your cell phone
Use electronic devices judiciously
Remain in attendance until the
end of the class (or we can’t issue
your credits)
Thank you!

3. Your Credits….
Are submitted electronically to the State of Connecticut
by Tiger Real Estate School
Tiger Real Estate School will email you a
Certificate of Completion within 14 days
Please make sure we don’t land in “spam” and be sure
to save your Certificate where you can find it
There is a $25.00 fee to reissue a Certificate

4. What is the
NAR Legal Scan and
Legal Pulse?
 Legal Scan Published every two years by
National Association of Realtors
(last edition 2013)
Replaced by Legal Pulse – published
quarterly

5. What is the
NAR Legal Pulse?
The Legal Pulse is a quarterly newsletter that analyzes trends
in the previous quarter that impact real estate professionals
The newsletter tracks both cases and statutes
The Legal Pulse tracks when real estate professionals are
being held liable
It also identifies emerging issues and trends, helping to reveal
where additional training is needed

6. Caveat Emptor
The doctrine of “Buyer Beware” is gone….
Replaced by Agent Beware!Replaced by Agent Beware!
Realtors are held to a higher standard
“What do you know about the property” has been
replaced by “What should you know about the
property!”

7. Find the full report…
NAR website
Law, ethics, policy tab
http://www.realtor.org/publications/legal-pulse
Here are the highlights for 2Q…

8. Legal Pulse 2Q Highlights

9. Property Condition Disclosure
PCD is/will be an ongoing source of
disputes
PCD ranked as the number 2 most
important issue of concern
Disputes are likely to increase over next
two years
Significant need for training

10. Short Sales, “As Is”,
Foreclosures…oh, my!
Complex transactions
Adverse Property Conditions – common
denominator
Significant need for training

11. Case Study
Are there
limitations in an
“As Is”
transaction?

12. The Case….
The property is sold “As Is”
Property Disclosure Report states there is
hardwood flooring beneath carpeting
Buyer moves into house
Buyer discovers there is water damaged
plywood, not hardwood, beneath carpeting
 Buyer sues seller for negligent
misrepresentation

13. The Seller Claims…
Caveat Emptor
The house was sold “As Is” – it’s the buyers
responsibility to inspect the premises
The buyer should have pulled back carpet and
investigated drainage issues
“As Is” means “As Is” (so leave me alone)

14. The Trial…
The Buyer chose NOT to have a home inspection
The Buyer relied on the representations in the
Property Disclosures
Evidence reveals the Seller was aware of water
damage and plywood subfloor
Buyer acknowledges it was an “As Is” purchase

15. Questions…
 Did the Buyer adequately inspect the premises?
 If you were the Buyer’s Agent, what advice would
you give him/her?
 If you were representing the Seller, what advice
would you give?
 What would you do if the Seller asked you to
complete the Disclosure Documents for him?
 Does “As Is” get the Seller off the hook?

16. The Verdict…
The Court held that an “As Is” disclaimer in a
Purchase and Sale Agreement would negate a
negligent misrepresentation claim against a seller
only if the buyer had knowledge of the alleged
defect
The buyer was totally unaware of the plywood
subfloor and water damage and relied on the
representations in the Disclosure Documents
The seller was ordered to reimburse buyer for cost
of hardwood floor and repair of entire properties
drainage system

17. FACT:FACT:
80% of claims against
brokers E&O insurance
are due to property
related conditions
Effective disclosure helps you earn more and
keep more commissions

18. Today’s AgendaToday’s Agenda
• Help you develop an awareness of what to
look for (without turning you into home
inspectors)
• Highlight warning signs of possible defects
• Overview of Top 10 Property Conditions that
most often result in disputes
• Common sense rules of disclosure

19. Let’s test your “observation skills”

20. Why is this information important?
Happy, well informed clients, mean more
referrals (and no disputes)
More referrals = more earnings
Minimize your risk by having a greater
awareness and understanding of adverse
conditions

21. FACTS…
According to the 2014
National Association of Realtors
Profile of Buyers and
Sellers

22. FACT:
55% of New Buyers rely upon their Agent to point out
unnoticed features/faults with the property
50% of Repeat Buyers rely upon their Agent to point
out unnoticed features/faults with the property
(This ranks as #2 benefit)
#1 benefit is to help buyer understand the process
Source: NAR Profile of Buyers and Sellers

23. FACT:
90% of homes sold in the
Northeast used an Agent or
Broker
YOU ROCK!!
Source: NAR Profile of Buyers and Sellers

24. Buyer Demographic Changes
Profile of Home Buyers and Sellers
2010 Profile 2011 Profile 2012 Profile 2013 Profile 2014 Profile
Median Age 39 45 42 42 44
Gross HH
Income
$72,200 $80,900 $78,600 $83,300 $84,500
Household
Composition
58% married
couples,
20% single
females, 12%
single males,
8% unmarried
couples
64% married
couples,
18% single
females,
10% single
males,
7% unmarried
couples
65% married
couples,
16% single
females,
9% single
males,
8% unmarried
couples
66% married
couples,
16% single
females,
9% single
males,
7% unmarried
couples
65% married
couples, 16%
single
females, 9%
single males,
8%
unmarried
couples
Children in
Home
35% 36% 41% 40% 35%
Own a 2nd
Home
14% 19% 19% 19% 21%

25. First-time Buyer Share Remains
Under Historical Norm
Profile of Home Buyers and Sellers
30%
36%
50%
33%
%
10%
20%
30%
40%
50%
60%
1981
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2013

26. Agent Use By Buyers & Sellers
Remains High
88% of buyers (nationally) purchased their home
through a real estate agent or broker
 Most want help finding right home
 Benefited from help understanding the process
 High importance on honesty and integrity
88% of sellers were assisted by an agent
 Help market home
 Sell w/in specific timeframe
 Help price home competitively
 Reputation and honesty and integrity important
2014 Profile of Home Buyers and Sellers

27. Agent Assisted Sales High
Profile of Home Buyers and Sellers

28. Satisfaction
Process:
 89% of buyers are satisfied with the buying process
 88% of sellers are satisfied with the selling process
With the agent:
 88% of buyers would use agent or recommend to others
 83% of sellers would use agent again or recommend to
others
2014 Profile of Home Buyers and Sellers

29. In Summary:
Protect Yourself And Your Client
By Understanding Their
Expectations and Having a
Greater AWARENESSAWARENESS Of
Adverse Conditions

30. Lovely House

31. Nice Landscaping Job

32. Great Grading

33. Do You See the Problem?

34. Interior View

35. Termites, Mold, Damage

36. Top 10 Property Conditions
1. Structural Defects
2. Flooring/Walls
3. Water, Mold, Water
Intrusion
4. Sewer/Septic
5. Insects/Vermin
6. Plumbing
7. Roof
8. Environmental Issues
– Radon, Asbestos,
Lead, UST
9. HVAC
10. Electrical

37. Structural Defects/Walls & Floors#1 &
#2

38. Walls/Floors

39. Deck Framing & Support Systems

40. Structural Defects
Some defects are obvious….

41. Structural Defects
….and some are not!

42. Structural Defects
A closer look

43. Structural Defects
Do you see any problems?

44. Structural Defects

45. What’s The Defect Here?

46. Warning Signs of Structural Issues
Sloping or sagging
floors
Overly snug fit to floors
and windows
Cracked tile floor
Excessive concrete
cracking and
separation
Alterations without
permits
Sagging beams
Funky
supports/columns
Stair riser/tread size
Crushed sills/joists
Suspicious homeowner
repairs

47. Structural Issues are the #1
cause of disputes in the Real
Estate Transaction
Develop an awareness of what to look for
Scrutinize seller disclosures – ask questions
Defer to professionals – have a home inspection
QUESTIONS??

48. Mold/Water Intrusion#2

49. Moisture & food source create
mold
Leaking roofs, plumbing problems,
humidifiers, damp/wet basements,
improperly vented appliances and fans, etc
Combine with a food source such as wood,
wallboard, or wallpaper to cause the growth
of mold
Spores are released and inhaled

50. Mold & Water Intrusion
What’s the problem?

51. Crawlspaces

52. Floor
Attic
Subfloor

53. Mold & Water Intrusion
Is this a problem?

54. Damage to Systems

55. Mold & Water Intrusion
Nice exterior !
Any cause for
concern?

56. It’s Just A Small Window Leak…

57. How Bad Could It Be?

58. Mold & Water Intrusion

59. Warning Signs of Water Intrusion
Poor grading
Inadequate ventilation
in crawlspace or attic
Cracks in foundation
Efflorescence
Roof stains in attic
Missing roof shingles
Stains on ceilings
Newly painted
foundation/floors
Water stains
baseboard/furniture
legs
Mold
Sump pump
Downspout not
extended
Window rot

60. Mold and Water Intrusion are the
#2 cause of disputes in the Real
Estate Transaction
Develop an awareness of what to look for
Use all of your senses
Scrutinize seller disclosures – ask questions
Defer to professionals – have a home inspection
Q U E S T I O N S ???

61. Are you Ready??
Let’s Play..
CosmeticCosmetic
oror
ConcernConcernMAKE

62. Here’s how it works:
Name the Defect
Determine the significance – bear in mind cost to
remediate/repair and impact upon structure and
other components
Is the defect Cosmetic? Costs less than $500
and has no impact upon structure
Is the defect a Concern? Costly repair,
implicates other components/structure

63. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

64. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

65. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

66. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

67. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

68. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

69. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

70. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

71. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

72. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

73. Septic/Sewer#4

74. Sewer & Septic
Where does the water go?
Where does this water go?

75. Sewer & Septic
Backwash?

76. Sewer & Septic
Laundry & water discharge?

77. Warning Signs of Septic/Sewer Issues
Slow sink drains
Toilet flush fills, then drains
Odor in yard – septic breakout
Internal odors
Washing machine (grey water) drained to outside

78. Insects/Vermin#5

79. Bats & Birds Nesting in Attic

80. Carpenter Bee Stains, Holes, & Damage

81. Powder Post Beetle Damage

82. Termite Mud Tubes & Damage in Wood

83. Welcome to the
People’s Court

84. Part 1 – The People’s Court

85. B R E A KB R E A K
15 MINUTE15 MINUTE

86. 2014 – 2016
(3) Credit Continuing Education Courses
 Don’t Let Water Intrusion Sink Your Deal!
 Smart Energy Updates for Existing Homes
 Innovation in Sustainable Housing – Green Building Best Practices
This Old Connecticut House
 Minimize Your Risk, Maximize Your Earnings
 Environmental Issues – Evolution to Resolution
 What to Expect When We’re Inspecting!
 Mold to Sold!
 Residential Building Practices

87. The Verdict

88. Warning Signs of Insect Damage
• Termites:
 Mud tubes
 Damaged wood
 Soft spots or blisters
on drywall
Carpenter Ants:
 Frass
 Smooth channels along
wood grain
 Damaged wood
Powder Post Beetles
 Frass
 Small circular/oval holes
 Meandering holes
through wood
Carpenter Bees
 Staining
 Bees hover around
eaves, deck, fence
 Round holes

89. Plumbing#6

90. Plumbing
Anything
unusual?

91. Some Things Are Readily Apparent

92. Some Not So Obvious

93. Missing or Uncommon Traps

94. Exterior Vent Pipe

95. Settled Slab
Check Valve

96. Plumbing
The latest in designer plumbing!

97. Warning Signs of Plumbing Issues
Loose and missing
grout and tiles
Loose toilet
Safety glass at tub or
shower enclosures
Water odors (sulfate)
Aged piping
Leaking drain traps
Reduced water pressure

98. Roof#7

99. Worn roof with tar Tilo Hurricane Shingles
Aged Roofing Materials

100. 10 Year Old Roof

101. Roof Framing
See any hint of a problem?

102. Roof transition Exposed Flashing
Roof Flashing

103. Roof Accessories (Think Bling!)

104. Aged Low Pitch Roofing

105. Rubber Roofing Products

106. Defective Asphalt Shingles

107. Wood Roofing Products

108. Slate Roofing

109. Warning Signs of Roof Issues
Age of Roof
Rusted Flashing
Missing, cupped or curled shingles
Stained ceilings
Cracked or missing tiles
Buckets in the attic

110. Winter 2014 – ICE DAMS!!!!

111. Your Opinion Matters….
Before the end of
class, please take a
moment to complete
our evaluation form…

112. Environmental Issues
Radon (in air and water)
Asbestos
Lead
Underground Storage Tanks
#8

113. What is Radon?
Radon is a gas
It is inert (inactive)
It has a life
expectancy

114. Radon Measurement Units
Average indoor radon is 1.3 pCi/L
Average outdoor radon is 0.4 pCi/L
U.S EPA action level is 4.0 pCi/L

115. Radon in Well Water
Radon in well water can
increase levels of radon
gas in the home
Radon is released into
the air as water flows
Household activities can
release large amounts
of radon into the home

116. Radon in water is expressed in
picocuries
Average concentration of radon <1,000 pCi/L
Levels in groundwater have been found above
1,000,000 pCi/L
Highest amounts have been found in the
Northeast
Private wells tested in Connecticut indicate an
average radon level of about 3,000 pCi/L

117. What Is Asbestos?
Mineral fiber used in
over 3,000 products.
Requires a special
type of microscope for
identification
Used to strengthen, to
provide heat insulation
and fire resistance
Friable or non-friable.

118. Asbestos
The mere presence of asbestos in a home or
building is not hazardous
Damaged asbestos may release asbestos fibers and
become a health hazard - friable
Asbestos material in good condition is not a health
issue, if left alone – non-friable

119. Lead in Paint
Lead was used as a pigment and
drying agent
• One half of all homes built from 1940 –
1960 contain heavily leaded paint
• Two thirds of homes built pre-1940
contain leaded paint
• 1978 U.S.CPSC lowered max content
to trace amount

121. Warning Signs of Environmental Issues
Radon – lack of disclosure, mitigation system not
functioning
Asbestos – wrapped pipes, loose insulation,
vermiculite, aged floor, 6 x 6 ceiling tile
Lead – 1978 or before
UST – cut off fuel lines, new gas, evidence of prior
oil tank, propane

122. HVAC#9

123. Warning Signs of HVAC Issues
Aged units
No maintenance tags
Odors in house or near unit
Ineffective function – not hot enough, not cold
enough
We’re going to revisit this is our
“Just Serviced….” section.

124. Electrical#10

126. Panel, Condition & Location Problems

127. Warning Signs – Electrical Issues
Outdated Service size
Panel issues
Exposed romex
Open junction boxes
Extensive use of electrical cords
Aluminum wiring
(primarily used from 1965 – 1974)

128. Let’s Play…
“Name thatName that
Defect!!!”Defect!!!”
Are you ready?

129. Name that defect!!

130. Name that defect!!

131. Name that defect!!

132. Name that defect!!

133. Name that defect!!

134. Name that defect!!

135. Name that defect!!

136. Name that defect!!

137. Name that defect!!

138. Name that defect!!

139. Name that defect!!

140. Name that defect!!

141. Just Serviced…

146. Legal Scan- Part II
Other areas of
concern….

147. Seller’s Disclosures…
who the heck is the Seller, anyway?
“I’m acting as Power of Attorney for the
Seller”
“I’m just the Investor”
“I’m just the Relocation Company”
“I haven’t lived there for years”
Are these valid reasons not to complete the required Property
Disclosure Report?

148. Test your
Property
Condition
Disclosure
Statute I.Q.
(CGS 20-327b)

149. Who is required to complete the Property
Disclosure Report?
 Is the Report State-created or Federally-
created?
How many questions are asked in the
document?

150. Are there any Statutory
Exemptions to the requirement of
completing the Property
Disclosure Report?
If so, what are they?

151. There are several exemptions..
Transfer of one or more co-owners solely to one or
more of his co-owners
Transfers made to spouse, child, parent, sibling,
grandparent or grandchild where no consideration is
paid
Transfers pursuant to a court order
Transfers of newly construction residential real
property covered by a one year warranty
Transfers made by executors, administrators,
trustees or conservators

152. Exemptions…
Transfers made by the Federal Government or any
government chartered corporation (such as FHA,
FDIC)
Transfers by Deed in lieu of Foreclosure
Transfers by the State of Connecticut or any political
subdivision thereof
Transfer of property acquired through foreclosure or
deed in lieu of foreclosure

153. Additional areas of concern….
Misstatement of square footage
Imported Drywall
Boundaries
Zoning
Valuation
Off-Site Adverse Conditions
Stigmatized Property

154. Best Practices…
Make sure your client understands his/her obligations
under the contract
Explain that he/she has a right to bring in specialists to
investigate the condition of the property
Do not give advice beyond your area of expertise
Point out potential trouble spots and recommend a
Home Inspection
Review Seller’s disclosure and ask for more
information if necessary
Document everything in writing

155. Rules of Disclosure
Inquire – ask the seller for information
Inspect – look around, what do you see
Identify – any concerns to your client
Recommend a home inspection
Disclose – make sure your buyer is fully
informed
Document - Put it in writing

156. Minimize Your Risk
Make sure the Inspection Companies that you
recommend have:
Errors & Omissions Insurance
Are fully licensed in Ct and strictly adhere to the
Standard of Practice
Stand behind their inspections

157. Thank you!
Questions??
?

158. Thank You!!