Recently, I received an offer on a ranch property in Redwood Valley. It’s an unusual property. In addition to a 7,300-square-foot residence and several outbuildings, it includes 1,700 acres of cattle grazing, springs, ponds, and wells. Although I welcomed the offer, I knew it meant the time had come to begin a long list of disclosures.
Any time real property is sold in California, the seller must disclose information about a whole host of topics, revealing details that could influence a buyer’s desire to purchase.
This includes property-specific disclosures such as a leaky roof, a well that runs dry in the fall, a septic system with damp patches over it, or an addition for which there is no building permit. It also includes proximity-specific issues, such as whether a property is at the bottom of a hill with erosion problems or within earshot of a popular shooting range. And finally, it includes regulatory disclosures, including zoning and other issues. For example, is the property zoned for its current use or within 300 feet of land zoned for agriculture? These issues can affect how the property can be used and the owner’s quiet enjoyment of it.
In the case of the ranch property, the list of disclosures came to 17 pages (not the disclosures themselves, just a list naming the disclosures that would be forthcoming). Each type of property comes with required disclosures, and if the property includes multiple uses, then it includes more required disclosures. In this case, the ranch property included residential, raw land, and farming, not to mention other disclosure-worthy elements such as streams and wells.
As a seller, when you complete a disclosure questionnaire, there may be questions you simply don’t know the answer to. That’s okay. Disclosure questions often begin with “Are you aware of…” If you are not aware, say no.
However, to comply with the law, you must disclose information you know or should reasonably be expected to know. For example, if the question is, “Are you aware of any stains on ceiling?”, refusing to look up doesn’t give you the right to say no.
Not only does the seller have to disclose what they know, REALTORs must also disclose information they discover during their visual inspection of the property or find out via other sources.
Common disclosures include a seller property questionnaire, raw land questionnaire, lead paint and asbestos, natural hazards (including military ordinance, earthquake, fire hazard, flood hazard, among others), right-to-farm ordinance, right-to-industry ordinance, agent visual inspection, and a transfer disclosure statement. You must also share the results of any inspections you have access to. This is by no means a complete list. Talk with your REALTOR for details about your specific property.
Decades ago, a REALTOR who worked for me listed a 100-year-old property. The seller disclosed the presence of a buried tank in the back yard. (Any residence more than 100 years old in Ukiah likely has or had a buried tank, but that is not common knowledge outside of the real estate industry.) This REALTOR died 15 years ago, and the property has sold twice since then. Now the property is up for sale again, and the REALTOR who listed the property works for me. Because we keep good records, the current listing agent must disclose the buried tank, even though it was never disclosed to the current owner.
Here’s the thing with disclosures: If a disclosure dissuades a potential buyer from moving forward with the sale, it’s better to know that up front. If the information is not disclosed and is discovered later, the seller will end up buying the house back or paying for remediation of whatever was not disclosed. It’s better to have everything out in the open from the start. If there’s any question about whether to disclose something, the answer should always be yes. To be sure you can disclose all relevant details, I recommend keeping receipts, permits, and notes about any home repairs and upgrades.
And if you’re a buyer, please read the disclosure information. Make sure you understand what’s being disclosed. If something doesn’t look right, question it. Although you can always take legal action after the close of escrow, that can be time consuming and expensive. Life is too short to buy problems. Slow down and take the time to address potential issues before the transaction is complete.
If you have questions about property management or real estate, please contact me at [email protected] or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.
Dick Selzer is a real estate broker who has been in the business for more than 45 years. The opinions expressed here are his and do not necessarily represent his affiliated organizations.
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