To disclose or not to disclose. That is the question all right. California, where real estate claims are twice the national average, is a leader in the disclosure movement.
An excerpt from Disclosure in Real Estate put out by the DRE, 5th Edition:
Listing and selling brokers/agents must each conduct a reasonably competent and diligent visual inspection of real property, which consists of 1 to 4 dwelling units, that is sold through said brokers/agents. The same obligation applies to manufactured homes (as defined in Health and Safety Code Section 18007) when the foregoing property is being transferred through brokers/agents. The purpose of the visual inspection is to disclose to the prospective buyer all material facts affecting the property's value, desirability, and intended use.
This does not put all the burden on the agent however:
Nothing in the law relieves a buyer of the duty to exercise reasonable care to protect himself/herself by considering facts which are known to or within the reasonably diligent attention and observation of the buyer.
The real responsibility now lies with buyers and sellers and the independent experts they choose to advise them. The mandatory disclosures make it clear that sellers and their agents must disclose what they know and make the property available for inspections. However, the real message is that buyers have the right and duty to hire experts and conduct their own investigations.
As the seller, you do not have to conduct any expert investigations for the buyer's benefit. However, if you do hire an expert, you need to give a copy of the expert's report to the buyer. If you have even the faintest question about whether or not to disclose something to potential buyers, avoid the potential for liability and tell all. Full disclosure of any property defects will help increase the buyer's confidence that you're dealing fairly. and it will protect you from legal problems later, such as buyers who want out of the deal or who claim damages suffered because you carelessly or intentionally withheld information about your propert
y.
Each agent's inspection certification is contained in the Real Estate Transfer Disclosure Statement. In addition to the foregoing, real estate agents must disclose all material facts affecting the value, desirability, and intended use about which they have or should have notice or knowledge that may not be discernable from the required visual inspection.
Although some real estate agents have a great deal of knowledge and expertise, it is not their duty to give expert advice about structural defects, wells, septic systems, environmental hazards or even market value. However, they do have the duty to advise their clients about selecting appropriate experts to conduct tests, inspections and prepare reports. Your real estate agent should give you the names of several experts and let you make the choice.
And remember, just because you disclose a problem doesn't mean you must repair or correct it. The disclosed item can become a point of negotiation between you and your buyer. These disclosures, while required, are not part of the contract between the buyer and the seller and are not warranties by the seller.
Thank you for stopping by. Your comments on this post are welcomed and appreciated.
No one sold more homes in Del Norte County in 2009--*both in number and volume--than Fran Gatti. Put Fran to work for you!
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Fran..... this was well written and some great advice.... even though I do mortgages. ;o)