Truth In Selling: California’s Real Estate Disclosure Obligations
By statute and under common law, a real estate seller is obligated to disclose any and all facts about their property related to its value and appeal — a wraparound obligation that requires scanning the property for internal defects and scoping the surroundings for environmental and social issues. Therefore, documents must be provided to prospective buyers that include declarations such as whether there are noisy neighbors, if there is an airport in close proximity to the property and if the property is located within a natural hazard zone.
Disclosing natural hazards
Fires, earthquakes and floods take a huge financial toll on individuals and the public purse. with expenses include equipping and training scores of emergency personnel and funding the economic recovery after the natural disaster. One way to mitigate the financial tolls and bodily harm caused by natural disasters is to keep people from settling in areas that are prone to them. The Natural Hazards Disclosure Law was enacted in 1998 to educate prospective buyers and allow their informed decisions to shape the course of future development in that area. This law requires the seller of a residence or his agent to disclose whether the home is located in an area that is prone to natural hazards.
The benefit of disclosure to buyers is substantial because it gives them an opportunity make a realistic offer on the property by taking into account:
- The impact these hazards may have on the future development and maintenance of the property
- The cost of coverage
- Post disaster access to assistance
One study, which looked at more than 20,000 real estate transactions conducted between 1997 and 2000 in more than 60 zip codes, found a difference of approximately $8,000 dollars between pre- and post-disclosure pricing of flood plain homes.
Disclosing just about everything else
The real estate transfer disclosure statement gives the buyer a detailed overview of the property and its location and is required in real estate transactions in San Bernardino as well as in the rest of the state. The obligation to provide this statement is not relieved by an “as is” sale. Part of the information that must be disclosed is the presence of environmentally hazardous substances such as formaldehyde, as well as specified child safety hazards. The disclosure statement gives the buyer a sense of potential issues that may arise and allows the buyer to make an informed decision on this very important purchase.
The lawyers at Schlecht, Shevlin & Shoenberger have 170 years of combined experience as well as the skills and diligence needed to successfully handle your important real estate transaction matters.