Disclosures … when should we use them?
As real estate licensees, we are required to provide certain written disclosures at various times during the course of a real estate transaction. With all of the legal issues facing licensees, disclosures are intended to protect the buyer, the seller, and the agent. These disclosures should begin at the time a listing agreement is executed between the seller and the real estate brokerage firm. Although it may be considered time consuming, a complete Seller’s Real Property Disclosure Statement is one of the best ways of keeping everyone honest. This statement basically covers every feature and important element of the home. It allows the seller to identify certain defects that may not be readily observable by the buyer. It also includes components such as electrical and plumbing that may not be functioning or need repair. Simply selling a property “as is” does not release the seller from disclosing any known defects that may affect the value of the property.
If a home was built between 2003 and 2006 when Florida was experiencing building material shortages, some homes were built or renovated using defective drywall imported from or manufactured in China. Many firms are requiring the Chinese/Defective Drywall Addendum to Contract be used in all transactions regardless of the age of the house. A licensed inspector qualified to conduct Chinese Drywall analysis should be hired if the property is suspected of having this material. The money spent on this inspection can save thousands of dollars down the road.
In addition to the Chinese Drywall disclosure, a Mold Inspection Addendum should also be used at the time a purchase and sale agreement is executed. Many properties have been left vacant as a result of foreclosures, being sealed up without air conditioning. With Florida’s high humidity, it doesn’t take long to create an atmosphere conducive to mold growth. This addendum allows the buyer to have a mold inspection at his or her expense. If the inspection reveals significant presence of mold that requires professional removal at a cost that exceeds what the buyer is willing to pay, the buyer may cancel the contract.
For homes that were built in 1978 or earlier, a Lead-based Paint Warning Statement must be provided to the purchaser. The seller would sign this statement indicating whether he or she has knowledge of LBP/LBPH (lead-based paint hazards), and provide information and available documents to the buyer. The buyer is also given a pamphlet entitled “Protect Your Family From Lead in Your Home”.
Radon Gas disclosure is required for all residential transactions in Florida. Radon gas is naturally occurring radioactive gas that when accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.
One of the major issues affecting Cape Coral is the proposed water and sewer expansion program. Sometimes agents try to answer too many questions haphazardly, rather than refer the buyers to the City of Cape Coral or Lee County.
Another disclosure itemizes what the seller and buyer’s estimated closing costs will be relative to the purchase and sale transaction. These are merely estimates, and once the HUD-1 settlement statement is prepared by the closing agent and lender, both seller and buyer should review these items for accuracy. In January 2010, the new HUD-1 will become effective with simpler language.
As a former investigator for the Florida Department of Business and Professional Regulation, I have investigated hundreds of complaints filed by consumers. Some of those complaints alleged the real estate licensee failed to provide various written disclosures. The consequences could be very costly and the ultimate penalty is revocation of license. So, when your agent asks you to sign disclosures, whether you are the buyer or seller, they are simply doing their job for the purpose of protecting the public.
Mario D’Artagnan is a broker associate with The Jim Fischer Team at Gulf Coast Realty Network, Inc. Mario is a former Florida Real Estate Commission investigator, a former real estate instructor, and a published author. Mario is also a U.S. Air Force veteran. For more information, contact Mr. D’Artagnan at: mariodartagnan@yahoo.com, or call 239-565-4445.