Mandatory Disclosures Required
|Click on our Advertisement
With ever increasing mandatory disclosure obligations being placed on sellers of real estate, it can be difficult to keep-up with new requirements.
Below is a summary of disclosures required in residential transactions (1-4) units. Many of these disclosures are required on commercial transactions also.
Local residential disclosures may exist also, therefore it is always prudent to inquire about such requirements before escrow closes.
TDS (Transfer Disclosure Statement)
The law requires a seller to provide prospective buyers with a written disclosure statement covering such items as appliances, structural defects and modifications, possible easements, neighborhood problems and other material fact that may affect the principal's decision in a transaction.
Natural Hazards Disclosure Law
The Natural Hazards Disclosure law requires the seller or seller's agent to disclose whether the property is located in the following six zones:
Flood Hazard Zones
Areas subject to unusual flood risks
Areas subject to potential flooding in the event of a dam failure.
Very High Fire Hazard Severity Zones
Areas where property owners may be obligated to undertake specific maintenance duties.
Wildland Fire Areas
Areas wherein the state has responsibility for fire suppression
Earthquake Fault Zones
Areas located a certain distance from earthquake fault line
Seismic Hazard Zones
Areas subject to unusual ground movement during earthquakes
Lead Paint Disclosures
The law requires both sellers and lessors to disclose known lead hazards by providing an informational booklet and a disclosure form as addenda to the purchase contract or lease. The federal lead paint disclosures apply to leases and sales of residential property, including mobile homes, constructed before 1978.
Mello - Roos Districts
This law requires a seller of real property to disclose to a prospective buyer that the property is located in a Mello-Roos district. A Mello-Roos district is one in which special taxes are levied against property owners within the area to finance various public services, such as police and fire protection and facilities like schools and libraries.
Homeowner's Guide to Earthquake Safety
InfOrmational booklet designed to help property owners spot and correct earthquake - related concerns. A seller must deliver the "Homeowner's Guide" if the property consists of one to four residential dwellings, was built prior to Jan. 1, 1960, is of conventional light - frame consturction.
Megan's Law was enacted to notify buyers and tenants about the proximity of registered sex offenders. The law requires every purchase contract and lease agreement to contain a specific written notice that a database containing information about registered sex offenders may be accessed by buyers and tenants.
This disclosure is required for every lease or real property sales contract for residential real property entered into on or after July 1, 1999.
Disclosures involving the location and proximity of any military ordnance sites.
Water Heater & Smoke Detector Statement of Compliance
Recent California law requires that hot water heaters be securely strapped to prevent toppling over in an earthquake.
Installed smoke detectors are required outside of bedroom doors.
All residential transactions require these be accomplished prior to closing.
Known Hazardous Substances on the Property
State law requires that disclosure of known environmental contamination or hazards on a subject property be made to prospective Buyers. Environmental contamination could be a private underground fuel or heating oil tank that has leaked.
Environmental Hazards Disclosure Booklet
State mandate required that the California Departments of Real Estate and Health Services prepare a booklet to explain and discuss the most commonly found environmental hazards affecting residential property. This booklet is designed to provide general information on asbestos, formaldehyde, lead, radon, and hazardous waste.
Delivery of this booklet to prospective Buyers is not required but is recommended.
Neighborhood Environmental Contamination
The potential for hazardous substance contaminated sites in the vicinity of residential property could be anything from a local gasoline station with a leaking underground fuel tank to an industrial site.
Disclosing the environmental information that is reasonably available today acknowledges that buyers may have questions over the uncertainties environmental contamination issues present.
Real estate agents and sellers are being held to ever more stringent and higher standards of care. The number one claim on Errors & Omissions Insurance is "failure to disclose" some item that a Buyer felt was material.
Although there is no way to completely prevent law suits, there are some general guidelines to help protect against non-disclosure liability.
Make all disclosures in writing and obtain acknowledgment signatures.
If there is any doubt, don't wait for the Buyer to ask - disclose, disclose, disclose.