California was one of the first states to provide laws for real estate professionals to protect the general public and consumers. The primary goal of these laws is to provide retain the disclosure to the buyer, and establish standardized reached an agreement with regard to a purchase.
Let’s start at the beginning of the listing period. The real estate agent must have the seller signed several contracts and disclosures. The following are descriptions of California contracts and disclosures:
Disclosure Regarding Real Estate Agency Relationships The real estate agent is required by law to disclose agency in relationships to the seller this form helps the age in discuss with the seller different types of age and representation.
Residential Listing Agreement There are several wasting agreements, but this is the most commonly used. Police sting of green meant is an agreement between the seller and agents to market or sell the property for a commission being. The listing agreement specifies when the property is to be actively marketed and in one manner. It also specifies expiration date for the listing agreement, the listing prize, commission agreement and dispute resolution clauses.
The Sellers Advisory A form exploiting the seller’s responsibility of disclosure and the process of selling.
Sellers Affidavit of Non-Foreign Status The internal in state revenue service’s require a buyer to have the seller complete a firpta form prior to close of escrow. This form is used for the purpose of tracking and taxing the sellers net proceeds if the money will be taken out of California or the united states. IRS will not tax and the out of state seller who has lived in California within the last two years prior to selling. But there is an IRS exemption form provided by the title company that the seller must complete to qualify. Many title companies include the firpta for the seller to complete along the way of closing papers, but always check with the title company to be sure. If the seller does not complete this form prior to close, and agent could potentially be liable up to the amount of agents compensation and the buyer could be liable for the actual amount of tax owed by the seller.
It’s a good idea for the agent to complete disclosures at the time of the listing appointment. Each office must abide by the disclosures specified in the purchase agreement contract, and additionally, may have their own office disclosures for the seller to complete. These disclosures are for the buyer to review. Below is an explanation of each disclosure. All parties must sign, the initial and date each form. The disclosures must be delivered to the buyer within the time specified in the purchase contract.
Smoke Detectors Statement of Compliance Seller verifies there is a working smoke detector inside the property.
Water Heater Statement of Compliance California law mandates that all water heaters be strapped with two metal straps for earthquake safety. Earthquake kits for homeowners are available for purchase at most local hardware stores.
Lead-Based Paint Disclosure (for homes built prior to 1978) There is a potential hazard that lead based paint may have been used on the house. This discloses the seller’s awareness of lead paint and explains the buyers right to an inspection to determine lead hazards.
Homeowners Guide to Earthquake Safety and Environmental Hazards A booklet provided to the buyer and seller by their agent that explains in detail potential earthquake and environmental hazards. Buyer and seller must sign a form acknowledging receipt of this booklet. The receipt is attached to the back of the booklet.
Residential Earthquake Hazards Report Questionnaire Discloses potential earthquake weakness in a home. Found on the back page of the earthquake safety and environmental hazards booklet.
Real Estate Transfer Disclosure Statement This is a checklist disclosure that the seller completes addressing specific questions about the property. The agents must also complete the agents disclosure portion and sign. Both buyer and seller and initial pages one and two of the disclosure and both parties signed page three. The seller also signs page two of the disclosure. The buyer and seller should sign page three of the disclosure that acknowledge receipt after both agents have completed their disclosure portions.
There are additional mandatory disclosures, such as natural hazards disclosure, geological and environmental hazards report, mold disclosure, California tax disclosure, etc. Always check with your broker to ensure you are using disclosures of appropriate for your area. You should always understand that the buyers have the right to any and all information that is known to the seller or agent. Disclose, disclose, disclose.
There are additional disclosures that are not mandatory, but frequently used. So keep in mind your cooperative broker and may request additional forms be completed by your seller when you get into contract.
Additional (but not mandatory) Disclosures
Supplement to the TDS A form that discloses additional information regarding the property condition.
Condominium Supplemental Disclosure Statement A form that disclose this information regarding the common use area of the subdivision or complex within an hoa.
Arbitration Disclosure Further explains arbitration and mediation procedures.
Agents Inspection Disclosure Instead of, or in addition to completing the agents disclosure on page three of the TDS the buying or selling agent completes an additional or supplemental disclosure.
When a disclosure is first generated, it starts from the seller to the buyer. The buyer should sign this disclosure after the seller has completed and signed it. the buyer should never sign a blank disclosure, and then submit it to the seller to complete and sign.
Ok so, Who gets what?
S E L L E R – S I D E – C O P I E S Listing Agreement Purchase Contract All State Mandated Disclosures Agency Disclosures TDS SSC (required for PRDS contracts) Lead Based Paint (if built prior to 1978) Smoke Detector Water Heater Residential Earthquake Hazards Report (if built prior to 1960) Receipt for Environmental Earthquake Hazards Booklet NHD Mold Tree (required for San Jose city only) Insurance (required on CAR contracts, when SSC is not provided) Market Condition Advisory Disclosure & Consent of Representation of More than One Buyer or Seller FIRPTA Seller Advisory All Inspection Reports (ordered by seller) Geological/Environmental Report Preliminary Title Report Buyer Pre-Approval Letter Buyer Down Payment Funds (CAR contracts only) Buyers Deposit Check & Receipt Contingency Removal Buyer’s Walk Thru Inspection
B U Y E R – S I D E – C O P I E S Purchase Contract All State Mandated Disclosures Agency Disclosures TDS SSC (required for PRDS contracts) Lead Based Paint (if built prior to 1978) Smoke Detector Water Heater Residential Earthquake Hazards Report (if built prior to 1960) Receipt for Environmental Earthquake Hazards Booklet NHD Mold Tree (required for San Jose city only) Insurance (required on CAR contracts, when SSC is not provided) Market Condition Advisory Disclosure & Consent of Representation of More than One Buyer or Seller FIRPTA Buyer Advisory All Inspection Reports (ordered by buyer or seller) Geological/Environmental Report Preliminary Title Report HOA docs Appraisal Report Buyer Pre-Approval Letter Buyer Down Payment Funds (CAR contracts only) Buyers Deposit Check & Receipt Contingency Removal Buyer’s Walk Thru Inspection Home Warranty Order
E S C R O W – C O P I E S Purchase Contract Seller Social Security Number Seller Loan Payoff Information HOA Docs 1031 Exchange Information
L E N D E R – C O P I E S All Parties Contact Information Purchase Contract Preliminary Title Report Buyers Deposit Check & Receipt Termite Report & Clearance (if requested) Roof Report & Clearance (if requested) Appraisal Report (acquired by lender) Income & Asset Documentation (acquired by lender from Buyer) Flood Cert (acquired by lender) HOA Cert (sometimes on their own form)