Bats in your belfry? You may need to disclose them
It seems never-ending lists of disclosure rules are springing up for property owners and their agents nationwide.
Seller disclosure laws first came onto the real estate scene in 1992 when the U.S. Congress moved to protect families from exposure to lead from paint, dust and soil. Several disclosure regulations were enacted.
Lead-based paint hazard disclosures were rolled into federal law in 1996 based on the details of the Residential Lead-Based Paint and Hazard Reduction Act (Title X). Applying to every state in the union, the federal lead law requires sellers to disclose known lead-paint-based hazards in pre-1978 construction, provide any inspection reports available and allow a 10-day “paint and risk assessment” period to buyers.
But lead disclosure is just the tip of the iceberg. The District of Columbia and 34 states now require additional disclosure in some form before the close of escrow, according to the National Assn. of Realtors. Many other states have limited disclosures for radon, lead or proximity to airports. Only California requires disclosure of earthquake zones.
Typically, sellers are asked to fill out a form indicating that all basic household systems are functional, such as the water heater and dishwasher. In addition, flooding problems, illegal construction and outstanding lawsuits must often be revealed.
Some states and localities dig deeper for disclosure details. In Arizona, for example, sellers have to reveal if scorpions, owls, reptiles or bee swarms have ever been observed on the property. Rabid animals should be disclosed too.
Here in California, the state-required disclosure list is one of the most extensive in the country, with more than a dozen separate disclosure-type documents required before the close of the sale for residential property.
In addition, some of the actual documents, such as the Transfer Disclosure Statement, are highly detailed and several pages in length, with sellers required to answer questions regarding everything from included appliances to “neighborhood noise problems or other nuisances.”
Why the disclosure detail? “Many laws and forms are a result of litigation,” explained June Barlow, vice president and general counsel for the California Assn. of Realtors.
Professional companies have sprung up to handle the disclosure overflow, because most owners are unable to provide information required by another form -- the Natural Hazard Disclosure Statement. Knowing such details as earthquake zone, landslide and liquefaction proximity are not on most owners’ to-do lists but are required to be provided among other details for that disclosure document.
What if an owner inherited or never lived in the place? Fortunately, the law does not expect knowledge to magically appear when none exists. No matter how the seller came to have title to a property, “does not know” is an established category.
What about nonresidential or specialized property? Commercial, income and mobile-home properties have lists of their own too. Some items apply exactly as they do in residential sales, such as the lead law for rentals; others do not. Consult a professional for details.
What if an owner or seller refuses to comply with disclosure law? In California, civil fines of up to $10,000 for each violation may be levied. Criminal violations may land a seller in jail for up to a year, plus a maximum $10,000 fine. Damages up to triple the actual amount suffered may also apply.
What happens when good disclosure goes bad? If a buyer is unsure they have all the details, they always have the right to inspect the property and draw their own conclusions based on help from experts. For example, “large cracks across bedroom ceiling” may be on the seller’s disclosure document. But where did they come from? Cracks can form from normal settling or hint at a foundation problem. Sometimes a buyer has to dig deeper to go where disclosure may not have led.
H. May Spitz is a Los Angeles-based freelance writer. Reader comments may be sent to hmayspitz@aol.com.
