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Real Estate Disclosure Forms: Foolproof or Fallible?

4 OF THE CRAZIEST THINGS BUYERS FOUND AFTER CLOSING

Magnifying glass showing homes for sale to illustrate the importance of real estate disclosure forms California disclosure laws are an integral part of the journey toward closing on a home. The Golden State, like many others, requires its residential property sellers to disclose certain things in writing before any deal closes. (See, California Civil Code Section 1102.) Although these real estate disclosure forms include important details about the property being sold, they can be susceptible to accidental or intentional omissions.

Disclosures are important because potential home buyers have a right to know as much as possible about a property they are interested in buying. This allows buyers to evaluate whether they really want to purchase it. But sometimes weird, or in some cases, wild, things either slip through the cracks or simply are not covered by disclosure requirements, which vary in every state.

You may be wondering what weird and wild things I’m referring to. Examples lie in a Realtor.com article titled The Wild Secrets Buyers Learned About Their Homes After the Deal Had Closed. After reading these stories told by real people, I thought I’d share some with you.

  • Snakes in the garageGrass snake (Natrix natrix) adult moving his tongue
    The buyer of a new home in Callicoon, New York was excited to move back to her childhood town. Growing up only a quarter mile from her new house gave her a real sense of security. After only seven months, though, that security disappeared when the buyer found a slithery surprise living on her property.

“We have a snake nursery in our basement and garage,” the woman said. “Every August/September, we are picking up dozens and dozens of baby garter, ringneck, and Eastern milk snakes to put outside. My 10-year-old daughter tries to talk me into keeping every single one of them!”

Did the seller have to disclose this? If the seller knew about the snakes, it should have been shared in the real estate disclosure forms. Pests, whether we’re referring to snakes, termites, roaches, or any other creepy-crawly typically fall under the definition of a defect.

  • Someone died on the property
    A woman thanked her lucky stars when she bought a new home in Columbia, TN. She got a great deal because the property had been sitting on the market for six months. She wondered why it sat for so long? Although the answer was haunting, the woman and her husband said it wouldn’t have changed their mind about buying.

“We found out the woman living there before us died in the basement,” the buyer reported. “She fell down the stairs and broke her neck, and her daughter found her the next day. We had no idea until our friend—who knew the woman’s daughter—told us after he came to our new house for the first time. It didn’t bother me much because there was nothing sinister that had happened.”

Did the seller have to disclose this? If the home had been located in the state of California, then, yes. Under California Civil Code Section 1710.2, if someone dies on the property, it’s a material defect, but only if the death occurred within three years of the date you make an offer to purchase or rent the home. California is among only a few states with a law and real estate disclosure forms requiring the seller to disclose a death in the home.

  • Unknown wishing well
    When a couple from Narrowburg, NY moved into their new house, they were well aware of a Sheetrock wall in the basement. The couple didn’t know that there was something behind that Sheetrock.

    “A couple of months after we moved in, the Sheetrock started crumbling, and our very own wishing well was exposed,” the husband said. “It’s a gorgeous, hand-laid, 6-foot-wide-by-9-feet-deep well; fresh, crystal-clear, cold water right at my fingertips all year round!”

Did the seller have to disclose this? Disclosure laws include any knowledge of material facts, so if the sellers were aware of the hidden wishing well, they were required to let the buyer know. In this case, the buyers were thrilled to uncover the secret. Had the wishing well been part of the disclosure process and stated on the real estate disclosure forms, the seller could have marketed their property with a bonus room and lured more potential buyers with that information.

  • Criminal history
    Unbeknownst to a single woman in Callcoon Center, New York, the barn on her new property had a criminal history.

“My barn was cocaine headquarters—manufacturing and such,” she explained. “The story, as I can piece it together, is that the house was rented out by the previous owners to people from Colombia, and they were processing cocaine in my barn. The FBI tracked a shipment of ether (which is used in the manufacturing process) from California to a remote location down a long driveway in upstate New York. They set up shop in a shell of a house up the hill and across the road.”

Should the seller have disclosed this? A home where a crime occurred is called a stigmatized property. If the property was located in the state of California, then yes, details about stigmatized properties must be disclosed. The National Association of Realtors defines stigmatized property as that which has been “psychologically impacted by an event, which occurred or was suspected to have occurred on the property, such event being one that has no physical impact of any kind.“ Examples of stigmatizing factors include murder, suicide and other deaths, serious crime, proximity to registered sex offenders, hauntings and other paranormal activity. According to NAR, only 15% of potential homebuyers would pay full market value for a stigmatized home. A further 19% would expect a 31% to 50% discount from the get-go.

In addition to disclosure laws, sellers in California must also complete an additional disclosure form, the Natural Hazard Disclosure Report/Statement, prior to any home sale. It can be obtained from your real estate agent.


In fact, I have one waiting for you here in my office. If you’re considering listing your home in any of Santa Barbara’s upscale neighborhoods, I’d be happy to add your property to my portfolio of fine homes and estates in the area. Give me a call at +1 805.886.9378 or email me at Cristal@montecito-estate.com


 

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