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Conflicts After Closing a Sacramento Home
There are some business relationships you never want to end because they are so much fun, especially when everybody in the escrow is happy and excited, and then there are the oddballs . . . well, we won’t go there. Those are few and far between, though, because I’ve been a lot more selective of with whom I decide to work in Sacramento real estate, because there is only one of me to be pulled in a dozen different directions. I strive for no conflicts during escrow and prefer no conflicts after closing a Sacramento home.
I generally go out of my way to help my clients after the escrow has closed. Sometimes they want to know if I can recommend any tradespeople or vendors, and I’m happy to share personal recommendations along with the caveat that their experience might be different than my experience.
Sometimes they want to receive a copy of their closing papers that they’ve misplaced, and I will gladly provide those documents to them, either via email or snail mail, whichever is their preference. Or, they might just have a question about types of home improvement projects they might tackle and whether it would add resale value down the road. I love to talk about home improvement projects almost as much as I love selling Sacramento real estate.
But then there are the calls and emails from other real estate agents who have some kind of pressing dilemma, a conflict after closing. Often it’s the former buyer’s agents who received the initial call from their previous buyer. And the nature of this call tends to fall along the lines of there is some kind of defect or problem the new owner believes the seller withheld or failed to disclose. Naturally, the new home owner expects her buyer’s agent to pursue the situation with the listing agent, and they want the listing agent to involve the seller and resolve the issue.
Yet, that is not how it works, I’m sorry to report. After the escrow closes, the listing agent no longer has a fiduciary relationship to anybody in the transaction. She is not allowed to practice law without a law degree. A Sacramento REALTOR just can’t get into the middle of conflicts after closing because that is best left to the parties themselves to resolve. It’s not that the listing agent doesn’t care; it’s that she can’t offer legal guidance. After the escrow closes, her job is finished, and she’s no longer a hired gun.
Call Elizabeth Weintraub, Broker #00697006 at 916.233.6759.
Is The Property Condition Disclosure Your Friend?
Is the property condition disclosure is your friend? When you list your Sacramento home for sale, you’ll be asked to fill out a property condition disclosure form known in California as a Transfer Disclosure Statement (TDS). You’ll also fill out the California Natural Hazard Disclosure Statement.
These detailed forms are required when transferring ownership of residential property of 1 to 4 units. The questions cover every material fact about the home and any appliances that will transfer with the home. Contrary to the laws in some states, sellers are also required to disclose the location of registered sex offenders. This information can be found via a map search at the California Megan’s Law website. The Residential Purchase Agreement contains this information and that covers the required disclosure. If a seller actually had direct knowledge of a registered sex offender in the neighborhood, this would be disclosed. (https://www.meganslaw.ca.gov/)
The property condition disclosure, along with others, must be given to the potential buyer. I have these filled out in advance for buyer review before the final purchase agreement is signed. Otherwise, the buyer has the option to terminate the contract within 3 days of receiving the disclosure. To fill out the forms correctly requires time and thought. In other words, it’s tedious work. Sellers are encouraged to fill out disclosures as soon as possible. However, it is important to fill out the property condition disclosure completely and accurately.
In California, home sellers are also required to report a death that occurred in the house within the past 3 years that was not AIDS-related. California law also requires emotional defect disclosures, but only if it has occurred in the past five years. In other words, an alleged haunting that occurred ten years ago need not be disclosed, but if residents report ghostly sightings at every full moon, it must be disclosed.
Completed disclosures help to offer some protection from disclosure related lawsuits, although, a lawsuit can happen if you have done everything correctly.
Some sellers ask questions about how much information to include on their property condition disclosure forms. They sometimes fear that the truth will scare buyers away. Perhaps in some cases, with some buyers, it will. But, it’s far better to wait for a different buyer than to end up in court later.
One well-known California couple tried to hide the fact that a large skylight leaked. They were “lucky” in that no agents or buyers came by on rainy days. They weren’t so lucky when the ensuing lawsuit cost them more than a million dollars. Their excuse for failing to disclose the leak was that it hadn’t been disclosed to them when they purchased the house.
A couple in another state falsified the results of a septic system inspection, saying it was in fine condition when, in fact, the inspector said it was failing. In the resultant lawsuit, the buyers were awarded triple damages. When you have disclosed every known defect about your house, you have done your best to be protected from lawsuits regarding those defects. This is because the buyers must attest to the fact that they have read your report.
If they skimmed the report and missed something, or if they read it, didn’t understand, and didn’t seek an explanation, it becomes their problem – not yours. If there’s a question on the form and you honestly don’t know the answer, you can say you don’t know. However, if you do know and choose to say you don’t, beware. There will be a neighbor somewhere who knows that you knew, and they’ll tell someone.
Even if you are not required to disclose a fact, such as a violent crime that occurred many years ago, you may be required to respond if asked directly. You can check with your company Attorney to confirm how to best handle these particular types of questions. However, saying “no” if you know the answer to be “yes” could ultimately lead you into court. I am a declared a “Probate Expert” to provide testimony in the Sacramento Superior Court, Probate Division.
I do sell homicide and suicide properties and have over the last 12 years. I have never sold a haunted house to the best of my knowledge. However, a Realtor who represented a buyer on a Probate listing reported to me, that she was in conversation with the decedent and that he had jumped up into her truck and had a conversation with her. My reply, “I have no special abilities like yours I just sell the real estate.”
The same rules hold true for your Realtor ®. He or she must disclose all known facts that would influence the price or the sale of a home. Realtors also fill out an Agent Visual Inspection Disclosure (AVID) form. This is a visual disclosure. As Realtors we do not craw under foundations or go up into attics as we are not certified to do inspections. This form is for defects or items of interest such as power lines and or telephone wires across the back yard. Though these lines are not a defect they can be a concern for some buyers.
If you want to hire Realtors who make sure all disclosures are completed and in your file, call Weintraub & Wallace Realtors with RE/MAX Gold, at 916-233-6759
— JaCi Wallace
California Transfer Disclosure Statement Mistakes Made by Sellers
Follow your agent’s tips to fill out the Transfer Disclosure Statement online.
Completing the California Transfer Disclosure Statement can be troublesome for many sellers in Sacramento. Although these documents are common place for most real estate professionals, we need to remember our sellers are not licensed in real estate. They don’t understand our lingo and “shop talk” has no place in Sacramento real estate. We need to make the completion of seller disclosures simple and easy for our clients.
I always tell my clients to call me if they have questions when completing the Transfer Disclosure Statement. We have only 7 days to deliver them to the buyer after contract acceptance. They don’t always call. Maybe it’s late at night when they get around to viewing the paperwork online. They just want to finish it and be done. Therefore, sellers might skim through the paperwork and not completely read the questions.
Common mistakes routinely made by sellers when completing the Transfer Disclosure Statement
On page one, Section I, Coordination With Other Disclosure Forms, there is a box for adding reports made pursuant to the contract. YES, check that box. The buyer will do a home inspection and possibly pest or roof or chimney or sewer, a whole slew of inspections.
On page one, Section II, Sellers Information, there is a box to check as to whether the seller is an occupant or not an occupant. Basically, do you live there or not? If the seller doesn’t live in the house anymore, the seller is not an occupant. Easy answer, but many sellers don’t know.
Also on page one are the items included in the sale of the home and descriptions. Here are hard-to-answer questions:
What is a 220 volt? It’s an enormous receptacle with 3 prongs that your dryer plugs into.
What is an Exhaust Fan? In the ceiling, generally, in laundry rooms, bathrooms and in your range hood in the kitchen. It sucks moisture out.
Number of Remote Controls? This is the device that opens your garage door. If you note 2 remotes, you better have two remotes to hand over to the buyer at closing. If you’re unsure, put zero. Be safe.
What is a Gas Starter? This is a key on the wall that starts a gas fireplace. If you have a wood burning fireplace, you do not have a gas starter.
Page 2 Part C of the Transfer Disclosure Statement, more common mistakes when sellers check No and should check YES:
Item #2) This is almost always YES. If for no other reason than you have a fence, usually in the back yard, that is shared and separates a neighboring property from yours.
Item #12) CC&Rs. Almost every home in Sacramento has CC&Rs. These are covenants, conditions and restrictions recorded in the public records around the time the home was built. The preliminary title report will tell you whether there are CC&Rs recorded against the property. Your title insurance policy when you bought the home will disclosure CC&Rs in Schedule B and except them from coverage.
Item #13 and #14 concern properties located within a Homeowner’s Association. If a seller pays an HOA fee to an HOA, then an HOA has certain authority. Check YES. If there are common areas shared with neighbors in an HOA the answer to #14 is YES as well.
At the bottom of the second page, if you checked YES to any of the 16 questions, you need to explain WHY you answered in the affirmative. Be brief. For example, you might say: #2 Fences. And it explains it all in one word.
Risk management says if you’re gonna get into trouble with the buyer, it could relate to the Transfer Disclosure Statement. Unhappy buyers who believe a seller lied to them are the worst kind to face in court. Don’t make these common mistakes when completing the TDS. If you need assistance or have a question, call your Sacramento Realtor for guidance. We are here for you.
Sellers Who Get Presale Home Inspection Slit Own Throats
A presale home inspection is a bad idea for a seller.
An an exclusive seller’s listing agent in Sacramento, I can preach until the cows come home that getting a presale home inspection is lousy idea but I still get resistance from other listing agents who disagree. They are confused about what doing the right thing means. Doing the right thing means protecting our seller’s liability and profit, and paying for a pre-sale home inspection is overkill. Not only that, but it can come back to bite. Such a disclosure can cost sellers tens of thousands and could even destroy their chances of selling a home.
California real estate law says a seller is required to disclose what a seller knows, which includes material facts. It does not say a seller is required to dig up every defect about which the seller has ZERO knowledge and then present those unknown findings on a silver-plated platter to buyers. It makes no sense in any sense of a logical argument to obtain a presale home inspection, except maybe to a home inspector who stands to profit.
Buyers are required to do due diligence. Buyers are required to obtain their own inspections, any and all that they choose to do. If a buyer fails to perform due diligence or fails to uncover a defect (about which the seller had no prior knowledge), that is not the liability of the seller. It falls squarely on the shoulders of the buyer. That’s the beauty of California real estate law and seller disclosures.
Case in point of ignorance. Barry Stone is a certified building inspector who syndicates a column about home inspections. He suggested in a recent article that banks selling REOs (real estate owned), which are foreclosures, should be required to obtain presale home inspections. This is a good example of a person focusing only on one part of real estate without looking at the bigger picture.
Banks are not required to disclose defects in a foreclosure when they have no knowledge, just like ordinary home sellers are not required to disclose defects about which the have no knowledge. Banks are even more off the hook since they never lived in the house. They sell the house AS IS because they don’t want to invite liability, either. Just like regular sellers.
To try to impose a law that requires home sellers, banks or otherwise, to obtain a list of defects to present to a buyer is ludicrous. Sellers are not required to discover factual information to present. Mr. Stone implies banks are dishonest and unfair because they don’t give their innocent home buyers a list of defects and they allow buyers to purchase their foreclosures without insisting buyers get a home inspection either.
If buyers are naive enough not to pay for a home inspection, and their real estate agent is bad enough not to suggest a home inspection, how is this the fault of the seller? Buyers are accountable to themselves. Our purchase contracts requires that buyers perform certain duties, and sellers give them ample time to complete those duties.
It makes no sense for a seller to go looking for trouble. Not to mention, no two home inspections are ever identical. A presale home inspection could show a defect the buyer’s home inspection would not and vice versa. Just don’t do it. Don’t think about it. Don’t act on that impulse, either. Your California purchase agreement states your sale is AS IS. Just leave it alone.
Are Homeless People a Material Fact in Midtown Sacramento?
Are homeless people a material fact in Midtown Sacramento?
A home seller asked me recently: are homeless people a material fact when selling a home in Midtown Sacramento? She said she’s lived in Midtown for so long that the homeless population in the area has become a fact of life, a daily occurrence, no different than the sun rising and setting every day. You come to expect it so you don’t pay much attention to it. Homeless people are prominent near homes in Midtown Sacramento, as well as other areas of Sacramento, and all over the world.
Except maybe for Cuba. You ask a Cuban about homeless people and they tell you there are none. That the government provides. Fifteen days of rations is the stipend in Cuba. People have to fend off hunger the rest of the month. While I did not see any homeless people during our trip to Cuba last year, it doesn’t necessarily mean they do not exist. Further, the close bonds developed through a strong family structure in Cuba is often such that there is always a place to go. Not quite the same as our families in Los Estados Unidos. Cubans will say if you see a homeless person, it’s because the person chooses to be homeless.
Not so in California. Many people are homeless because they have no choice. Still, they are not a defined protected class under the 7 protected classes of Fair Housing or even the extended classification by the state. But does that make homeless people a material fact?
I asked the seller if the homeless people sleep on her sidewalk, whether the homeless trespass on her property or throw stuff on her lawn? Generally with a disclosure, it’s a good idea to stick with what you know. You don’t want to go overboard, but you also do not want to under-disclosure or intentionally withhold a material fact. Material facts are anything that would prevent a buyer from buying the home or reduce the amount the buyer would pay for the home if such a fact were known.
Simply the fact a seller is asking whether a disclosure should be made often indicates the answer is yes. However, I suggest sellers stick to the facts and be brief. People get into trouble when they ramble too much. As a Midtown Realtor in Sacramento, my duty is to look out for my client’s interests. I’ve heard people mumble about Realtors not being forth coming or discouraging disclosures because maybe the transaction won’t close, and that’s such a dumb analogy. The fact is most Realtors routinely practice risk management to reduce the chances of either the agents or the sellers getting sued.
When questioned further, the seller said homeless people dig through the recyclables in the street, although not her containers because she does not put her recyclables in the street for pickup. Does she know for a fact those people are homeless? If the question is are homeless people a material fact, then the seller should probably verify whether those trash pickers are homeless. A good way to disclose might be people pick through the recyclable trash containers in the street and there are homeless people in the area. Those are the facts the seller knows.
Buyers don’t really care what sellers tell them, as long as a seller discloses. That’s the bottomline. If you’re looking for a Midtown Realtor in Sacramento, call Elizabeth Weintraub at 916.233.6759. 40 years of service.
