Chapter 3- Mandatory Disclosures Flashcards
Material facts
Is any fact, if disclosed, could affect the decision of an entity in completing the transaction. (Any fact that would influence the buyer to purchase or not purchase a home)
Full disclosure will…
Protect the principals (buyers and sellers)
Establish and build trust and confidence between the licensee and principals
Satisfy the law
The agent must disclose but also make certain principal understands the info and importance of info disclosed
Certain disclosures are mandated
Single agency
Representing only one principal
Dual agency
Representing both principals. Must disclose and get written consent.
Fiduciary responsibility (to the principal)
Highest, good faith and loyalty
Fiduciary responsibility
The agent must be loyal to the principal. It’s one of good faith and trust.
Duty of agent to principal: Obedience
The agent must obey the principals lawful directions. A principal direction to discriminate or fail to disclose material fact could not be followed and the principal should be so advised.
Duty of trust
Prohibits agents from revealing confidential information about the principal to others without the consent of the principal.
The fiduciary duty of the agent includes full disclosure of material facts discovered by the agent that the principal would reasonably want to know in making decisions.
For 1-4 unit residential properties you have an actual fit yo conduct a reasonably diligent visual inspection of the property. What areas do you inspect?
Only accessible areas.
When dealing with 3rd parties in regards to fiduciary responsibility…
You are not held to the same degree but you have duties of fairness, honesty and disclosure.
The word agent
Synonymous for broker. Only one agent per company- the real estate broker.
Buyers agent is the selling agent
They are selling you a house
Disclosure process (DEC)
Disclose- in writing educate on 3 types of agents and how they operate, signature received.
Elect- decide which type of agency will be used
Confirm- sign confirmation statement of what was agreed upon in step 2
When should an agent disclose agency?
As soon as possible
Real estate transfer disclosure is for who?
For 4 units or less. Seller fills this out.
The disclosure statement must identify
- Items in the home and whether they are operational.
- Significant defects of the home if any
- All info regarding improvements and alterations, concerns with neighbors and the neighborhood, HOA, and other possible problem areas.
Right of termination
Failure to provide a transfer disclosure statement will not invalidate a closed transaction but failure to comply could result in liability for damages.
Easton vs strassburger
We must now disclose to 3rd parties. It requires that all real estate agents conduct a competent and diligent visual inspection of all accessible property areas in a real estate sale involving 1-4 unit residential properties and disclose to the prospective buyer all material facts affecting the value of desirability of the property.
A red flag is
A visual sign or indication of a defect
Many agents today protect buyer in the area of inspection disclosure
- Have the buyer pay for a home inspection and a termite report 2. Obtain a home warranty
Death disclosure
Must disclose if it occurred within 3 years and disclose manner of death.
Exception to death disclosure
HIV/AIDS- you disclose death but not the manner z
Earthquake disclosure
Seller must disclose if property is or is not in an official earthquake fault area.
Must disclose if the dwelling has earthquake weakness
Lead based paint
The seller of home built before 1978 must deliver to buyers the booklet protect your family from lead in your home.
Environmental hazards booklet
Includes asbestos lead and radon etc.
Subdivision disclosure
The purpose of the California subdivided lands law is to protect purchasers in new subdivisions from fraud.
Disclosure known as public report
Must be provided to purchasers who must sign and accept the report before purchase is complete.
Real estate commissioner may issue a preliminary public report that is good for one year. A conditional public report that allows the subdivider to enter in to contract can be issued but escrow can’t close until issuance of the public report.
