If you’re ready to buy a property, you’re concerned that you are purchasing lots of unknowns and wondering if the seller has been completely honest with you about the defects.
If you’re considering selling your home, you know you’re going to have to sign a document outlining everything that’s wrong with your home. Possibly even the reason you are selling!
Don’t fret, the Real Estate Disclosures are meant to protect both buyers and sellers, during and after the deed transfer of the property.
The purpose of the real estate disclosure is to accurately describe the condition of the property.
When selling property in California, it is required to be given to the prospective buyer as soon as possible before the deed transfer. The buyer has 3 days if the disclosures are hand delivered and up to 5 days after postmark to terminate the offer for sale. Most buyers sign the document showing they have received the disclosure information with the contract agreement. Your listing agent will have you fill out and sign the necessary paperwork when your home is listed.
The disclosure statement itself if a form with a series of questions and check box responses. There are opportunities to expand with comments if an explanation is needed. The questions are all related to the integrity of the structure and interior systems, as well as, questions asking for info on known environmental hazards. Anything that might make the property unsafe for the new inhabitants should be disclosed.
There are some cases where a disclosure is not necessary:
- In the cases of foreclosure since the company selling the property is not familiar with the property.
- When the property has been willed to another after a death.
- Transfers between co-owners such as when there is a divorce.
- When purchasing directly from a builder. Although if you choose to use a real estate agent, disclosures are still used.
- Transfers to and from any governmental agency such as HUD or in the cases where the home is transferred due to failure to pay taxes.
- Court ordered transfers.
When a home is sold “as is” there is often still a disclosure document but the buyer signs a statement that he or she is purchasing the home with those defects and will not request any repairs as part of the condition of sale.
It is in the best interest of the seller to include accurate information in the report to avoid the possibility of expensive lawsuits in the future. It is in the best interest of the buyer to be informed about all aspects of the property before finalizing the purchase.
In addition to the property disclosure, buyers should request all recommended inspections and consider putting a home warranty into place. Sellers may even include a home warranty as part of the sale. Disclosures, inspections and home warranties all contribute to peace of mind for the buyers and sellers during a real estate transaction.