Section 17: Property Conditions and Disclosures Flashcards
Property Conditions And Disclosures:
When In Doubt Disclose:
* When should there be disclosures?
o When ________ exist that affect property value or intended use by
someone else normally in a real estate transaction for sale.
Conditions
Property Conditions And Disclosures:
When In Doubt Disclose:
* ________:
Declare, explain, obtain documentation, give choices to the parties so that they can make an informed decision and not hold other party liable.
Disclosure
Property Conditions And Disclosures:
When In Doubt Disclose:
Agents’ best recourse is to be the ________ of the source and to disclose anything that you feel is important to the transaction.
Source
Property Conditions And Disclosures:
When In Doubt Disclose:
* Our duty is to protect the public, as well as ourselves and the brokerage.
* Often best said- if ________ would want to know about it, disclose it.
You
Property Conditions And Disclosures:
Duties of Disclosures:
* Any individual who is party to a real estate transaction and has knowledge of something that could ________ impact the transaction has a duty to disclose.
Materially
Property Conditions And Disclosures:
Duties of Disclosures:
* Common law has imposed duties on ________ of real estate, especially residential to disclose any material facts known to the seller affecting the value or desirability.
Sellers
Property Conditions And Disclosures:
Duties of Disclosures:
* SELLERS must disclose:
o Written list of known property ________.
o Answer buyer questions regarding property condition.
o Disclose any information wherein previous disclosure might lead to false assumption.
Defects
Property Conditions And Disclosures:
Duties of Disclosures:
* Buyers also have a duty to deal honestly and fairly with all parties including the seller.
o BUYERS who knowingly can’t close on a transaction are guilty of failure to disclose pertinent facts and can be held ________ for damages.
Liable
Property Conditions And Disclosures:
Duties of Disclosures:
o Buyers are responsible for actual notice however: the buyer is ALSO responsible for inspection of ________, like public records for liens, or attachments.
Notices
Property Conditions And Disclosures:
Duties of Disclosures:
* Real estate agents have a duty to ________ parties involved in a transaction – not just the person or entity that they are representing but also to the other party and agents.
All
Property Conditions And Disclosures:
Duties of Disclosures:
* Real Estate Brokers and Agents have the MOST liability since they are licensed and trained in ALL aspects of ________.
Disclosure
Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Agents must disclose any information that may negatively affect the ________ paid.
Price
Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Must also disclose IF KNOWN, that their party may not be able to ________.
Perform
Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Sellers agent may know of a ________ that could prohibit the sale.
Divorce
Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Buyers agent may know that buyer is planning on filling for ________.
Bankruptcy
Property Conditions And Disclosures:
Duties of Disclosures:
* Realtors® may be held to an even HIGHER standard as they all pledge to abide by and
uphold the National Code of Ethics.
* The “________” is the easiest answer to disclosure.
o Would you want someone to disclose this item to you
o If you answer yes, DISCLOSE IT!
* It is always better to error on the side of caution and to disclose vs not disclose and face consequences later.
Golden Rule
Property Conditions And Disclosures:
Contracts:
* Agents commonly use Boilerplate contracts and addendums drafted and modified by the ________ for real estate contracts.
* In the contracts are certain stipulations that must be followed by all parties in order to protect not only the agent/broker but also buyers and sellers.
Arizona Association of Realtors (AAR)
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
Purchase Contract requires the seller to provide the buyer with the Seller Property Disclosure Statements (SPDS) within ________ Days of the acceptance of the contract.
3 Days
Property Conditions And Disclosures:
o SPDS means ________.
Seller Property Disclosure Statements
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
Seller Property Disclosure Statements (SPDS) is a very important source of information that buyers and inspectors rely upon to educate themselves on the history of the home.
The sellers will fill out the SPDS to the best of their ability and must disclose latent defects, ownership history, ________, previous damages and so on.
Pests
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
* Buyers will have their inspection period to investigate any items found in the Seller Property Disclosure Statements (SPDS).
or any other type of inspection they deem necessary pertinent to the sale.
*This is also known as the buyers ‘________’.
Due Diligence Period
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
________:
Steps taken by someone to verify important information.
Due Diligence
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
In Arizona it is commonly the ________ Day Due Diligence inspection period unless agreed to otherwise.
10 Day
Property Conditions And Disclosures:
________:
* At the end of the inspection period, buyers sign a this to give to sellers.
Buyers Inspection Notice and Sellers Response (BINSR)
Property Conditions And Disclosures:
Due Diligence Inspection Period:
o BINSR means ________.
Buyers Inspection Notice and Sellers Response
Property Conditions And Disclosures:
Buyers Inspection Notice and Sellers Response (BINSR):
o After receipt the buyer must ________ any defects that they deem important that they want the seller to fix before closing.
Disclose
Property Conditions And Disclosures:
Buyers Inspection Notice and Sellers Response (BINSR):
Buyer’s Duties:
o Accept property in condition.
o Ask for repairs to be made.
o Or can elect to ________ the contract.
Cancel
Property Conditions And Disclosures:
Buyers Inspection Notice and Sellers Response (BINSR):
If elect to cancel, buyers are entitled to their ________ back.
Earnest Money Deposit
Real Life Note:
The Due Diligence Inspection period is NOT to be used as an opportunity to renegotiate the offer and acceptance terms. This is often done, but it is incorrect. The Buyers Inspection Notice and Sellers Response (BINSR) does NOT discuss money, or terms but instead address the ________ condition of the property.
Physical
Property Conditions And Disclosures:
Quiz:
Choose the correct statements that explain duties of disclosure…
Seller must present a written list of known property defects
Brokers are not held to the same standard of duty to deal with honesty and fairness.
Buyers are responsible for inspections of notice
Agents must disclose any information that may negatively affect the price paid
Seller must present a written list of known property defects
Buyers are responsible for inspections of notice
Agents must disclose any information that may negatively affect the price paid
Property Conditions And Disclosures:
Study Guide:
What are a potential buyer’s options at the end of the inspection period?
At the end of the inspection period, buyers have three options: Accept the property, Reject (Cancel), or counter the property’s condition. If they choose to accept, it’s taken as-is. If they cancel, everyone is returned to the standard starting point. If they counter the condition, the buyers will present the BINSR to sellers in Arizona. (BINSR Buyers Inspection Notice and Sellers Response.)
Property Conditions And Disclosures:
Study Guide:
Your client (a buyer), six days after signing a purchase contract, decides that they no longer want to buy the home and gives you no reason as to why. Can they receive their earnest money back?
If the client elects to cancel, buyers are entitled to their Earnest Money back.
Property Conditions And Disclosures:
Study Guide:
What is the purpose of the SPDS?
SPDS is a significant source of information that buyers and inspectors rely upon to educate themselves on the home’s history. The sellers will fill out the SPDS to the best of their ability and must disclose latent defects, ownership history, pests, previous damages, and so on.
Property Conditions And Disclosures:
Study Guide:
A day after receiving the SPDS, your client (a buyer) calls you and asks for your opinion on a roofing repair done in 2015. They want to know if you think it was done correctly. How would you proceed?
As real estate agents, you are not qualified or licensed to discuss the construction or defects in real property. The best course of action here would be to refer them to a licensed roofer for a more qualified opinion.
Property Conditions And Disclosures:
Quiz:
How many days does a seller have to furnish SPDS to a buyer after acceptance of the contract?
Two
Three
Ten
Ten business days
Three
Property Conditions And Disclosures:
Quiz:
What is a seller not required to disclose?
Private airports nearby
Proximity to a sex offender
Expansive soils
Fissures
Proximity to a sex offender
Property Conditions And Disclosures:
Quiz:
Which of these issues does not require disclosure?
Sick building syndrome
A previous occupant with HIV
Dry wells
Polychlorinated biphenyls
A previous occupant with HIV
Property Conditions And Disclosures:
Quiz:
What is a seller not required to disclose to the buyer?
List of known property defects
Minimum acceptable price
Answers about property condition
Any information wherein previous disclosure might lead to false assumption
Minimum acceptable price
Property Conditions And Disclosures:
Quiz:
All of the following statements except which one are true with regards to disclosures in real estate?
Material Facts Must Disclosed if Known
Seller is liable in Arizona to disclose existence of haunted houses
The house was the site of a natural death years ago
The agent must correct any misconceptions that the buyers may have about the property
Seller is liable in Arizona to disclose existence of haunted houses
Property Conditions And Disclosures:
Quiz:
What must be signed by the buyer after the inspection period?
SPDS
Due diligence report
Home inspection
BINSR
BINSR
Property Conditions And Disclosures:
Quiz:
If a buyer elects to cancel the contract during the inspection period, what will they receive?
Earnest money
BINSR
Down payment
Home inspection fee
Earnest money
Property Conditions And Disclosures:
Quiz:
What options does a BINSR not provide to a potential buyer?
Elect to cancel the contract
Lower their offer price
Ask for repairs to be made
Accept the property in condition
Lower their offer price
Property Conditions And Disclosures:
SPDS/BINSR:
To be used solely and exclusively by members of the ________.
Arizona Association Of Realtors® (AAR)
Property Conditions And Disclosures:
Material Facts and Defects:
* ________:
Items that if known would have changed the outcome.
Material Facts
Property Conditions And Disclosures:
Material Facts and Defects:
* Material Facts:
* If Material facts are not disclosed and discovered later that a party had knowledge, this is grounds for the other party to seek damages and ________.
Remedies
Property Conditions And Disclosures:
Material Facts and Defects:
* Material Facts:
* Failure to disclose material facts or defects is common ground for lawsuits against agents – especially when agent is self-representing as an ‘________’.
Owner Agent
Property Conditions And Disclosures:
Material Facts and Defects:
* Material Facts:
* Parties cannot claim ________ to certain situations like roof leaks or broken pipes.
Ignorance
Property Conditions And Disclosures:
Material Facts and Defects:
* Material Defects:
Known flaws or defects that would affect the outcome of sale.
* All parties must advise if material defects are known as it would directly affect the outcome of the sale or the ________ of value.
Consideration
Property Conditions And Disclosures:
Material Facts and Defects:
* Latent Defects:
Not readily known or visible but materially affects use or value.
* All parties must advise if material defects are known as it would directly affect the outcome of the sale or the consideration of value.
* Parties do not have to disclose LATENT defects as they may not ________ about them.
Known
Property Conditions And Disclosures:
Material Facts and Defects:
* Latent Defects:
o ________ in the ground or old wiring inside the walls can’t be seen. So, this would be something they may not be aware of as a seller.
Radon Gas
Property Conditions And Disclosures:
Material Facts and Defects:
________:
‘Buyer Beware’ philosophy that the buyer is own their own.
Caveat Emptor
Property Conditions And Disclosures:
Material Facts and Defects:
Caveat Emptor:
o No longer true as buyers are not experts in all things and rely on experts to facilitate in the
transactions – thus placing ________ responsibilities on agent.
Fiduciary
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Relationships between agent and client:
o If related or somehow ________, the agency MUST be disclosed in contract.
Interconnected
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Relationships between agent and client:
o Representing a family members or if they have any ________ in a business who is making offer on a home.
Ownership Interest
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Relationships between agent and client:
o ________ is a mandatory disclosure to everyone. This occurs when the agent owns the home.
The general public would be at an unfair advantage in dealing with an agent who does not disclose that they are licensed when selling their own home.
Owner [Agency]
Property Conditions And Disclosures:
Agency Specific Disclosures:
________:
Advertisements for real property where the agent fails to tell the general public that they are a licensed agent.
Blind Ad’s
Property Conditions And Disclosures:
Agency Specific Disclosures:
Blind Ad’s:
The Brokers name (Brokerage who employs agent) MUST be written in the ad in a predominantly displayed manner.
* Brokers ________ is Acceptable.
Logo
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
*Agents should never assume the duty of a home inspector, attorney, accountant or any other licensed field.
*Always suggest that clients seek the advice of a ________ professional in that field.
Licensed
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
Home or property inspectors are licensed under the governing body of the ________ in Arizona. NOT the ADRE.
Board of Technical Registration (BTR)
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
Could be found guilty of a felony by “________”.
Impersonating a Licensed Professional
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
Remember: C.C.R.P.
1.
2.
3.
4.
- Contractual Duties and Obligations
- Confidentiality Terms of Offers
- Relationships between Agent and Client
- Price
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Price:
o Agents are hired to represent their clients in the fairest manner possible.
o Duty to disclose the fair market price is ________ to sellers and the public.
Invaluable[Critical]
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Price:
Sellers who price their homes too ________ are leaving money on the table.
Low
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Price:
Sellers who price their homes too ________ face longer then needed selling time, stagnation of listings and eventually a termination of listing agreement.
High
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Price:
Sellers who price their homes too low are leaving money on the table.
Sellers who price their homes too high face longer then needed selling time, stagnation of listings and eventually a termination of listing agreement.
Liability could be placed on broker for failing to properly ________ property.
Price
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Confidentiality:
o Clients will discuss things sometimes that are confidential.
o Brokers/Agents need to understand what needs to be ________ confidential.
Kept
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Confidentiality:
o If it is a “________” of the contract or property, it NEEDS to be shared with the potential buyers.
Material Fact
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* ________:
o Agents should NEVER hurt their clients negotiating position unless they have information that their client may not be able to perform.
Confidentiality
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Terms of Offers:
o Disclosure of another offers terms could affect the outcome of other agents and their clients offers, NEVER disclose ________ offers terms to other parties.
Another
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Terms of Offers:
o Agents are OBLIGATED to share with their sellers that a buyer has the ability to offer ________ than their current offer if they know this.
More
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Terms of Offers:
o You may NOT disclose to another party that your seller would have taken ________ for a listing that you are representing on the purchase price.
Less
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Terms of Offers:
Brokers must share all offers that come in with the seller, even if they are under contract, unless otherwise written to ________ offers.
Seller may want to have backup offers in case the current buyer fails.
Hold
Property Conditions And Disclosures:
* Megan’s Law:
State registration systems to maintain a database of registered ________. Designed to enhance the safety of the neighborhood and it’s residents.
Sex Offenders
Property Conditions And Disclosures:
Megan’s Law:
* Sex offenders are defined as anyone who:
o Kidnaps children.
o Commits sexual crimes against children.
o Or has committed ________ violent crimes.
Sexually
Property Conditions And Disclosures:
Megan’s Law:
* Certain states require licensees to disclose this information to prospective owners/tenants. This disclosure is ________ required in ARIZONA.
Not
Property Conditions And Disclosures:
Megan’s Law:
* Many times, the State will send out ________ to all residents in an area where an offender is to either relocate to or if already living there was convicted a sex crime.
Notices
Property Conditions And Disclosures:
Megan’s Law:
o In ARIZONA:
Licensees DO NOT disclose this information due to the ________ law.
IMPORTANT: May ONLY refer clients to the resources available, i.e.: government websites.
Stigmatized Property Law
Property Conditions And Disclosures:
Quiz:
TRUE or FALSE: Failing to disclose material defects is not enough to pursue a lawsuit against an agent.
True
False
False
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
* Sellers of Real Property are required to disclose the existence of an HOA and the known terms of any ________ that are in effect for that community or PUD.
Covenants, Conditions and Restrictions (CC’Rs)