Disclose Disclose Disclose

In Real Estate there is one responsibility that easily outweighs any other that a seller (or his agent) have. That is the one regarding disclosure. Simply stated if you know a pertinent fact or detail germane to the property, it must be disclosed. Failure to do so could put the offending party at severe risk of litigation.

For the seller, the form most commonly used to achieve this purpose is the Real Estate Transfer Disclosure Statement or the TDS for short. I thought it appropriate to spend a little time investigating this form because properly filled out it can be a shield, improperly completed and it will be the spear by which you are skewered.

As with all of the CAR forms, the first section identifies the property in question and confirm that it is in compliance with section 1102 of the civil code as of the date it is completed.

Section two clarifies whether or not the seller is living in the property, and the amenities of the home. Through a series of check boxes we confirm the existence of such things as Stoves, dishwashers, garbage disposals, cable tv, sprinklers, etc. We also notate the existence of pools, and the source of the utilities IE: water, gas and electric. And, it is here that we confirm that all of these items are in good working order. Or, we confirm that they are in need of attention.

In section 2B, we are asked if there are any significant defects/or malfunctions in any of the following, interior walls, ceilings, floors, exterior walls, insulation roof, windows, doors, foundation, slabs, driveways, etc: If any of these boxes are checked we must then describe the defect in question.

Two C is the area where we identify whether or not there were any materials on property which could pose an environmental hazard, features of the property shared in common (usually fences), encroachments, room additions (with or without permits), areas of the lot that were back filled or compacted, any damage caused by slippage or settling, flood, earthquake or fire. Whether or not the home is in a homeowners association, or is governed by cc&r’s (covenants, conditions, and restrictions) or any other deed restrictions. Notices of abatement or citations against the property are also identified here, as are any neighborhood nuisances. I think you get the picture. This is where you truly get into the meat of the disclosure by answering direct questions that could impact the desirability or habitability of the home.

I remember one time purchasing a home for my family. The seller as obligated, provided me with a transfer disclosure statement which I reviewed and used as a final confirmation that I could accept the home in it’s current condition.

One of the questions in the form ask “Flooding, drainage, or grading problems” to which the seller answered no. Looking at the lot, and recognizing that from the back of the property towards the home there was a substantial grade difference in which it appeared to me that the runoff would most likely drain towards the home. The seller, when questioned about the drop in elevation stated that they had lived in the home for nearly two decades and had “never experienced any issues in regards to drainage”. I have to tell you that was good enough for me…until the first rain. Within a couple of hours of the rain beginning I was standing in my best pair of rubber fishing boots, in four inches of water piling sandbags up against my sliding door in a fevered effort to keep the water off of my new carpet.

The neighbor saw me feverishly sweeping the overflow of water into the pool in order to lessen the potential damage that seemed eminent. And, he made the statement that he never quite understood why the sellers never installed drains as this scenario had played itself out every time it rained over the past twenty years.

Armed with this newfound information, I obtained quotes for adding sufficient drainage to divert the water from the patio. Most of the quotes were in the three thousand dollar range and requested that the sellers make good on this problem which they promptly refused to do.

After a very brief hearing in front of a small claims court commissioner who will remain nameless, I was awarded a judgment for One thousand eight hundred dollars. The judge in his infinite wisdom determined that as a REALTOR, I should have possessed special knowledge that would have precluded me from relying on the integrity of the seller or the accuracy of his disclosures (my bad).

Suffice to say, I did in fact install the needed drainage and we never had a repeat of the situation. And, when it came time for me to sell, I did disclose on my TDS the fact that at one time we did have a drainage problem, but that we had taken corrective measures to assure subsequent owners that they would not be troubled by drainage issues.

So I guess, what I am saying is this, when in doubt disclose. When you disclose be accurate. And probably most important is the following lesson, REALTORS do not possess comprehensive knowledge of the flow patterns of ambient water created by torrential rains no matter what a small claims commissioner might believe.

See you in escrow.