Chapters 8 & 9 - Real Estate Disclosures Part I & II Flashcards
Errors and Omissions Insurance (E&O)
Professional Liability Insurance used by real estate brokers to cover errors and omissions made by the real estate broker and salespersons who are working under their license.
Agency Disclosures
Disclosure of Single/Dual Agency
Disclosure of Relationship with Principal or Licensed Principal
Acknowledgement of Receipt of Agency Disclosure Form
Disclose, Elect, and Confirm Agency Relationships
Disclosure Regarging Real Esate Agency Relationship Form
What if a Seller/Buyer refuses to sign acknowledgement of the Agency Disclosure Form?
Agent must sign and date a written declaration of the facts of refusal.
Real Estate Transfer Disclosure Statement (TDS)
Sellers are required to disclose all material facts that relate to 1-4 unit residential property being sold. Disclosure is accomplished with the TDS form.
Required for both–
Owner occupied1-4 unit residential properties
Non-owner occupied 1-4 unit residential property (rented to tenants)
Which types of transfers are EXEMPT from the TDS disclosure requirement?
- Sale of new homes as part of a subdivision project
- Foreclosure sales
- Court-ordered transfers
- Transfers by a fiduciary in the administration of a decendents estate, guardianship, conservatorship, or trust except where the trusteee is a former owner of the property.
- Transfers to a spouse of to a person/persons in the lineal line of consanguinity (Heirs)
- Transfers resulting from a judgment of dissolution of marriage or of legal separation, or from a property settlement agreement incidental to such a judgement
- Transfers from one co-owner to another
- Transfers by the State Controller for unclaimed property
- Transfers resulting from failure to pay taxes
- Transfer to or from any governmental entity
Agency Visual Inspection Disclosure (AVID)
Both listing & selling agent of a 1-4 unit residential property have the duty to conduct a reasonable competent and diligent visual inspection of the property and to disclose to a prospective buyer all material facts affecting value, desirability, and implicitly intended use.
For Sale by Owner (FSBO)
A property being sold by the owner without the help of a real estate agent.
Seller lists home “AS-IS”
“As is” indicates the seller is not willing to repair anything however the seller MUST DISCLOSE all material facts that will affect the value of the property.
Death Disclosure & AIDS Death Disclosure
DD – If a person dies in a home, this must be disclosed for 3 years.
AIDS DD– Seller & agent is not required to disclose whether an occupant was afflicted or died from AIDS, UNLESS If a a buyer asks a direct question concerning deaths occurring on a property, owners/agents MUST be truthful and disclose the AIDS related death in a property.
Who develops the HOMEOWNER’S GUIDE TO EARTHQUAKE SAFETY booklet?
Seismic Safety Commission
Natural Hazards Disclosure Statement include the following
- Special Flood Hazard area
- Area of potential flooding shown on a dam failure inundation map
- very high fire hazard severity zone
- Wildland area that may contain substantial forest fire risk and hazards
- earthquake fault zone
- seismic hazard zone
Types of Local Disclosures
- Local area is subject to very strong ground shaking and moderate damage to th eproperty during potential earthquake scenarios
- Property located in an area of potential liquefaction
- Local area within 1/4 mile of light industrial, office, retail, mixed used, and unspecified commercial uses
- Salt water flooding; property located in an area with high potential for salt water flooding from failure of dikes
- Earthquake faults; located 1/4 mile from an active earthquake fault, fault rupture zones, landslides, or liquefaction
- Compressible soil: in an area with high potential for compressible soils and differential settlement
- Perchlorate: property located in perchlorate study area
- Property in viewshed protection area
- Geotechnical: property in a special geologic hazard safety area with soil hazards
Disclosure Notices
- Methamhetamine contamination
- Megan’s law - sex offender database
- Abandoned wells
- Carbon monoxide devices
- Natural gas and hazardous liquid pipelines
- Water conserving pluming fixtures
Environmental Hazards and Earthquake Safety Booklets
A booklet that is used to educate and inform consumers regarding common environmental hazards that are located on, and affect, real property.
Types of common environmental hazards:
- asbestos - common insulator and potential carcinogenic (cancer causing)
- radon - radon gas may become airborne and accumulate in crawl spaces or basements of homes.
- lead-based paint
- formaldehyde - a colorless, flammable, strong-smelling chemical that is used in building materials and to produce many household products. Found in particleboard, plywood, fiberboard, glues and adhesives, permanent-press fabrics, paper product coatings, certain insulation materials
- fuel and chemical storage tanks - an underground storage tank (UST) system containing the tank, underground connected piping, underground ancillary equipment, and any containment system.
- water and soil contamination - groundwater contamination. any activity where chemicals or wastes may be released into the environment has the potential to pollute groundwater.
- geotechnical hazards -
- methane gas - commonly produced in wetlands, can be very dangerous, extremely flammable, if breathed into - lungs can cause shortness of breath
- electromagnetic fields - EMFs surrounding power lines
- nuclear sources - close proximity to nuclear sources – nuclear power plant
- mold - when mold spores become airborne, they can cause serious health problems
- fungus - Cryptococcus Gattii – an airborne fungus usually found in tropical regions however recently (2006) found along Canada, PNW and CA
Carbon Monoxide (CO)
Odorless, colorless and tasteless poisonous gas produced by the combustion of natural gas.
Energy Rating Program
CA Energy Commission adopted a statewide home energy-rating program for residential dwellings – 8 possible areas include
- Minimum R-19 attic insulation
- Weather stripped no-flow type doors
- Minimum R-6 insulated water heaters
- Minimum R-5 HVAC duct insulation
- Minimum R-4 insulation for the first 5ft of a water heater tank line
- No broken windows or holes in the outside walls
- Maximum 3 gallon per minute shower heads
- Home Energy Rating System (HERS) Booklet – part of the combined Environmental and Earthquake Hazards booklet
Lead-based paint disclosure/ Lead hazard pamphlet
Paint that can peel chip, and deteriorate into contaminated dust, thus becoming a lead-based paint hazard.
Homes built before 1978 must disclose the presence of lead-based paint/any known information, location and condition of painted surfaced.
Smoke detector/ alarms compliance must be approved by whom
State Fire Marshall (SFM)
Seller must provide buyer written certification of smoke detector compliance, per Health and Safety Code Section 13113.8
Alquist-Priolo Special Studies Earthquake Zones Act
Controls development of homes located near hazardous earthquake faults and may experience surface fault rupture.
Earthquake insurance can be purchased to protect against the possibility of an earthquake destroying a home.
Subdivision Map Act vs Subdivided Lands law
Subdivision Maps Act–
2 or more
Subdivides a parcel of real property into two or more parcels
Subdivided Lands Law–
5 or more
Applies if a parcel of real property is subdivided into five or more parcels.
