SEMINAR NOTES – STAYING OUT OF COURT
If using the AVID, consider not writing disclosures (from the agent’s visual inspection) on the TDS in sections 3 or 4 – instead check off the “See attached Agent Visual Inspection Disclosure Form” box.
When the agent does not find anything of concern in a particular room, consider writing “nothing noted” (rather than “nothing wrong”) in the appropriate AVID section.
The first week after a buyer complains post-close about a property condition issue is a critical time for risk management efforts. Respond immediately, provide the client with very specific time frames for follow-up efforts, and consider arranging a rapid and appropriate compromise solution to bring the matter to an early conclusion.
Great caution should be used regarding content on social media websites, as well as in blogging.
When representing investors who are flipping multiple properties, consider advising them (in writing) to obtain a listing-side professional home inspection to supplement their limited knowledge of the property’s condition.
Avoid advertising that the house is “Certified Green” or other similar descriptions. The word “sustainable” should be used with caution.
Consider disclosing property issues that may seem overly obvious – such as a shopping center next door to the property.
Document text messages to clients with a printed email or other correspondence that will remain in the file.
Two fundamental principles of disclosure:
“The only buyers who sue are surprised buyers.” During a visual inspection, agents should ask “will the buyers be surprised about this property condition?” If the answer is yes, then they should disclose it.
“Point it out, do not figure it out.” Agents should bring a property condition of concern to the client’s attention, but should not diagnose the issue. So, “stain noted at ceiling due to roof leak” becomes simply “stain noted at ceiling.”
If cell phone reception is poor at the subject property, consider verbally advising buyer, and confirming that with a note in the transaction file. (Check office policy on this issue.)
Unless regional disclosure advisories are provided regarding dangerous local wildlife, consider disclosing:
“Buyer is advised that there is indigenous/invasive wildlife in the area. Check with the local municipality for further information if concerned.”
Replace numbers with the optional word “some.” Example: rather than “12 cracks noted at exterior siding” disclose “Some cracks noted at exterior siding.”
When a room is extremely cluttered, consider disclosing: “Extensive personal belongings prohibited a visual inspection of this area.”
When noticing a strong odor in the home, consider disclosing “Obvious odor noted.” Do not diagnose the issue.
Check with company management regarding policies concerning the disclosure of neighbor hearsay, and also the disclosure of nearby “half-way houses.” Opinions and procedures vary in these two areas.
Remember that all disclosure requirements remain the same for all parties in so-called “As Is” transactions.
When completing a disclosure form (TDS or AVID, etc.), agents should refrain from using adjectives. So, “3 large setting cracks noted above fireplace” becomes “Cracks noted above fireplace.”
For REO transactions, keep in mind that several disclosure requirements do apply to banks. It can be helpful to provide the bank seller with the California Association of Realtors’ publication “REO Disclosure Chart” – and to document the provision of that publication. Conduct your standard visual inspection using the AVID form. Consequently, the (1) seller has been notified of California disclosure responsibilities, and (2) you have performed your “due diligence” visual inspection.
For Short Sale transactions, standard “red flag” disclosure requirements remain essentially unchanged; agents, however, should be extra careful and focused in fulfilling this responsibility.
Do not use superlative words (totally, completely, thoroughly, etc.) in either disclosure or real estate advertising.
Keep in mind that the word “visual” in the TDS may be interpreted as “any sensory perception.”
Sample wording for building permit concerns:
“Buyer is encouraged to check with local municipality regarding building permit issues.”
