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Disclosures Required by Law

The average California real estate transaction involves over a dozen legal documents and over a hundred pages of paperwork. The vast majority of these documents deal with real estate disclosures. Disclosures protect buyers from being unaware of property defects, and they protect sellers from being sued. A primary concern of real estate agents is to keep people safe during the transaction. Although transactions without real estate agents involved comprise less than 5% of all sales, they make up over 50% of all real estate lawsuits. Get protected! A good agent will keep you safe, both financially and legally.

Below are listed some of the many disclosures that will occur during a typical real estate transaction. Most of these are now required by law:

Agent’s Real Property Inspection This document is required from the listing agent before the close of escrow. Today it is typical for both the buyer’s agent and the listing agent to write up a brief inspection on a form known as the Agent’s Visual Inspection Disclosure.

Commercial or Industrial Zone Location The seller must disclose if the property has commercial or industrial zoning, or if it is affected, or could be affected, by nearby property that has commercial or industrial zoning.

Death and/or AIDS The seller must disclose if anyone has died on the property in the last three years, excluding deaths due to AIDS.

Illegal Controlled Substances Contamination The seller must disclose any DTSC notification possibly affecting the property, along with any actual knowledge the owner might have of toxic contamination.

Earthquake Fault Zones The agent or seller must disclose if the property falls within a special studies zone. If the property is not in such a zone, a report verifying that fact can be attached to form NHD-11.

Earthquake Hazards Homeowner’s Guide The publication “The Homeowner’s Guide to Earthquake Safety” must be delivered from the seller to the buyer.

Earthquake Hazards- Commercial Guide This is required only on precast concrete or unreinforced wood buildings built prior to 1975. In such a case, the publication “The Commercial Property Owner’s Guide to Earthquake Safety” must be delivered from the seller to the buyer.

Flood Hazard Area A required disclosure from the seller if the property is in a flood plain.

Special Flood Hazard Area A required disclosure from the seller if the property is in a Special Flood Hazard Area.

Area of Potential Flooding The seller must disclose if the property is located in an Area of Potential Flooding.

Flood Disaster Insurance The seller must disclose directly on the grant deed if the owner of the property is required to maintain federal flood insurance.

Home Energy Ratings If a home energy ratings booklet is developed and delivered by the State of California, then if the seller provides such a book to the buyer, the seller has no more obligations to disclose the existence of a statewide energy rating program. This is a pending requirement that may or may not become law.

Home Environmental Hazards All known environmental hazards must be disclosed by the seller. Additional educational information about environmental hazards must be disclosed unless a Consumer Information Booklet is delivered to the buyer.

Home Inspection Notice If an FHA loan or HUD property is involved in the transfer, the borrower must be provided with, and sign, the form entitled “The Importance of a Home Inspection”.

Lead Hazard Pamphlet If the property was built prior to 1978, the seller must provide the buyer with the pamphlet “Protect Your Family From Lead in Your Home”.

Megan’s Law Disclosure Every real estate agreement is required to have a statutory-defined notice regarding the existence of public access to database information regarding sex offenders.

Mello-Roos or Bond Assessments The seller must obtain a disclosure notice concerning the special tax or assessment from each local agency that levies a special tax or assessment on the property. These disclosures, if any, must then be delivered to the buyer.

Military Ordinance Location The seller must disclose knowledge of any current or former military ordinance location within one mile of the property.

Toxic Mold The seller must disclose any actual knowledge of mold on the property. If applicable and available, the seller must also provide the buyer with DHS’s consumer handbook.

Seismic Hazards Zones The seller must disclose if the property is located within a Seismic Hazard Zone.

Smoke Detector Compliance The seller of a single family home must provide the buyer with a written statement indicating that the property is in smoke detector compliance concerning California State law. Local laws may be more restrictive.

State Responsibility Areas The seller must disclose if the property is located in a fire zone, the risk of fire, and the fact that the state may not provide fire protection services.

Very High Fire Hazard Severity Zone The seller must disclose to the buyer if the property falls within a Very High Fire Hazard Severity Zone, and whether it is subject to the requirements of Government Code Section 51182.

Subdivided Lands Law Only applies to the selling of new PUDs, condos, or conversions consisting of five or more lots, parcels, or interests. The seller must provide the buyer with copies of the FPR, PPR, and CPR as issued by the Department of Real Estate.

Water Heater Bracing Affects all properties with water heaters. Seller must certify to the buyer in writing that the seller has complied with state guidelines for bracing all water heaters on the property.

Supplemental Property Tax Notification Seller must advise the buyer that the buyer may received a second property tax assessment bill from the government after purchasing the property.

Seller Affidavit of Nonforeign Status Also known as a FIRPTA form, this serves as a disclosure to the buyer that seller is, or is not, a foreign national. This can affect tax withholdings during the sale.

Real Estate Transfer Disclosure Statement Used by the seller and agents involved to disclose miscellaneous known and suspected defects of the property. Common items of disclosure include: dangerous materials in or around the property, encroachments or property line issues, CC&Rs, easements, additions, alterations, soil or compaction issues, water drainage or grading issues, noise, zoning or building violations, past or current legal actions, and known or suspected structural defects.

Supplemental Statutory and Contractual Disclosures Used by sellers and agents to keep up with some of the latest required disclosures, including those involving: insurance claims within the last 5 year, known illegal drug manufacturing on the property, septic tanks, swimming pools or spas, animals, and government actions which may affect the property.

It seems that every year the government adds more disclosures that are required by law. Buying and selling property is no simple matter! There are over 25,000 real estate lawsuits per year in California. Despite my high volume of sales, I am very proud to say that NONE of my buyers or sellers have EVER been sued in a transaction I coordinated. I will save you money and keep you safe throughout the process. Anytime you have questions about purchasing or selling real estate in the Santa Barbara area, I would be happy to share with you my experience on successfully completing transactions.

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