Course Transcript Seller s Property Condition Disclosure Statement

Transcription

1 Course Transcript Seller s Property Condition Disclosure Statement Module 1: Introduction Welcome to the course, Seller s Property Condition Disclosure Statement. By the end of this course, you will be able to: Describe the key features of the Seller s Property Condition Disclosure Statement and what you need to do to comply with it Explain the Seller s Property Condition Disclosure Statement to your clients Guide and advise your clients on how to complete the Disclosure Form fully and accurately Understand how to meet the four conditions in order to satisfy the reasonable and diligent inquiry requirement under the Act. Ensure that the Disclosure Form is fully completed by all parties and inserted into the office transaction files In 2004, the Division of Consumer Affairs adopted rule N.J.A.C. 13:45A (New Jersey Administrative Code) Title 13, Chapter 45A, Subchapter 29 On May 17, 2004 the Division of Consumer Affairs form of the disclosure went into effect. The purpose of the Seller s Property Condition Disclosure Statement is to disclose the condition of the property to the best of the Seller s knowledge. The Consumer Fraud Act provides protections to the licensees from liability as long as they comply with the requirements that must be met under the amended law. In 1999, amendments to the Consumer Fraud Act were signed into law. This was very important because it has since provided licensees with certain protections when they act in good faith in the communication of information that turns out to be false. The Act provides that there shall be no right of recovery of punitive damages, attorney fees or both under the Act for false, misleading or deceptive information conveyed to a buyer which had been provided to a real estate licensee by or on behalf of the seller of real estate if the real estate licensee: 1. had no actual knowledge the information was false, misleading or deceptive, AND 2. made a reasonable and diligent inquiry to ascertain if the information is of a false, misleading or deceptive character. There are four conditions that an associate must meet in order to satisfy the reasonable and diligent inquiry requirements under the Act. They are: 1. The disclosure statement must be in the form adopted by the Division of Consumer Affairs, 2. The information contained in the disclosure statement must be obtained from the seller, 3. You must inform the buyer that the seller is the source of the information, AND 4. Prior to making that communication to the buyer, you must have visually inspected the property with reasonable diligence to ascertain the accuracy of the information in the disclosure statement. Copyright 2012, Weichert University Page 1 of 7

2 While the regulation states a visual inspection of the property is required, the DCA s response to comments to the regulation make it clear that pursuant to N.J.A.C. 11:5-6.4(b) (New Jersey Administrative Code Title 11, Chapter 5, Subchapter 6, section 4(b)), the associate s duty to ascertain the accuracy of the disclosure statement includes the obligation to ascertain all material facts relating to the property independently viewing the property, questioning the seller and using other resources such as surveys, maps, newspapers and public records to verify information. Weichert Policy The Seller s Property Condition Disclosure Statement in the form adopted by the Division of Consumer Affairs, must be a part of EVERY Weichert real estate listing and should be requested from the seller when Weichert represents only the buyer. For a Weichert listing, the Seller s Associate must: Obtain a completed Seller s Property Condition Disclosure Statement from the seller; Inform the buyer that the seller is the source of the information; and Visually inspect the property with reasonable diligence to ascertain the accuracy of the information in the Seller s Property Condition Disclosure Statement prior to advising the buyer that the seller is the source of the information. As a company policy, Weichert will NOT accept a listing if the seller refuses to fill out the DCA s form of disclosure. Consult your manager if this situation arises. If a Weichert buyer wants to make an offer on a Brand X property, where the sellers have refused to complete the form of disclosure, Weichert requires our buyer to sign the form: Notice to Buyers Regarding Seller s Property Condition Disclosure Statement. Rationale By receiving a completed Seller s Property Condition Disclosure Statement from the seller, it minimizes our company s liability and the liability of our associates. When working with a Seller, you must: 1. Explain the Disclosure form during the pre-listing or listing appointment. Furnish the seller with a copy of the Seller s Property Condition Disclosure Statement. 2. Inform the seller on how they can complete the Seller s Property Condition Disclosure Statement. Ensure that the seller fills in all sections accurately, answers all questions, and signs where applicable. 3. Conduct a visual inspection of the property to ascertain the accuracy of the information provided by the seller. 4. Sign the Disclosure form. Copyright 2012, Weichert University Page 2 of 7

3 Here are some sample dialogues you can use when working with a seller. 1. When presenting the Seller s Property Condition Disclosure Statement to your seller: Associate: A Seller s Property Condition Disclosure Statement is a form that is to be completed by the seller of a property. The form discloses the condition of the property for sale and any other information known by the seller. The Form itself is comprised of a little over 100 questions, which you, the seller, should fill out to the best of your knowledge. 2. If your seller refuses to fill out the Seller s Property Disclosure Statement: Associate: As a company policy, Weichert requires that all sellers fill out the Seller s Property Disclosure Statement. Unfortunately, without filling out this form I will be unable to take your listing. I hope that you understand what I have communicated about the importance of the form, and understand that by filling it out, we can continue to work closely to sell your home quickly. 3. If your seller asks if they have to disclose all known defects or problems about their house when they sell: Associate: Yes, you should disclose all known defects or problems about your house, as it will avoid any legal issues after the sale takes place. 4. If your seller does not want to fill out the Seller s Property Condition Disclosure Statement because they have never occupied or only briefly occupied the property: Associate: It is still important that you fill out the disclosure with as much information as you know. If there are questions that you do not know the answer to, you can simply use the explanation lines to explain. The fact that certain information is unknown by the seller, and why, can be important to the buyer. Once the Disclosure Form is signed, you must: Give the seller a copy of the Disclosure Form. Include a copy of the Disclosure Form in your office transaction file. When working with the Buyer, you must: 1. Explain the purpose of the Seller s Property Condition Disclosure Statement. 2. Ensure that the buyer signs the Disclosure Form in the applicable section. Here is a sample dialogue you can use when working with a buyer. 1. When presenting the Seller s Property Condition Disclosure Statement to your buyer: Associate: This form has been filled out by the seller of the property. I have taken their completed form and visually inspected the property. At this point you should review the form and carefully inspect the property and the surrounding area yourself. Please remember that this form has been filled out to the best of the seller s knowledge, but that the seller alone, is the source of all the form s information. With this said, I want to point out that I am not a professional inspector and recommend that you hire a licensed inspector to obtain a qualified expert s opinion. Copyright 2012, Weichert University Page 3 of 7

4 Once the Disclosure Form is signed, you must: Give the buyer a copy of the Disclosure Form. Include copies of the Disclosure Form in your office transaction file. Make sure to present the Seller s Property Condition Disclosure Statement to your Seller. A seller is under an obligation to disclose to a buyer all known material defects relating to the property being sold. The DCA has adopted a form of the Seller s Property Condition Disclosure Statement that is designated to assist sellers in complying with disclosure requirements and to assist buyers in evaluating the property being considered. Although sellers are not obligated to complete the disclosure form, Weichert has adopted a policy that makes this a requirement for every seller represented by a Weichert associate. You, as an associate, may NOT answer or help to answer any questions on the form for the Seller. Seller alone has to provide all of the information on the form. Question 83: Includes Highlands restrictions where applicable. Question 90: An associate must check with the applicable association to verify the information is correct. Should there be a bankruptcy of the seller or divorce proceedings, the seller must disclose that information here. The listing associate is obligated to conduct a visual inspection of the property to ascertain the accuracy of the information provided by the seller. The buyer s associate must obtain a copy and give a fully executed copy to the buyer. Buyer s associate is still obligated to make reasonable efforts to ascertain all material information concerning the physical condition of the property. Managers are required to sign the Seller s Property Condition Disclosure form. In addition to the Seller s Property Condition Disclosure form, we also have a form Notice to Buyer Regarding Seller s Property Condition Disclosure Statement. This form is to be used in cases where Weichert buyers want to make an offer on a property for which the sellers have refused to complete the new form of the seller s disclosure statement. With this form, the buyers acknowledge, and agree to accept, the potential risks of purchasing a property where the seller has not completed a disclosure form. They also agree not to hold Weichert responsible for any property conditions that could have been identified in the disclosure statement. Let s review the form in detail. The seller s names and property address should be filled in. Buyers must sign and date the form, accepting the potential risks involved with making an offer on a property that does not have a completed disclosure form. Now, It s time to see how you can apply the information we reviewed earlier in the course. In this module, you ll be given a series of case studies. Review the case study and click on the red box to see what went wrong. Finally, decide what the Sales Associate should have done in the situation by clicking on the green box. Copyright 2012, Weichert University Page 4 of 7

5 Case Study 1 1. A Weichert Associate sold a house to buyers where the Seller s Disclosure and MLS Brand X Listing correctly stated that the property was serviced by a septic system. 2. Two years later, these buyers decided to sell the house and use the same Weichert Associate who helped them buy the property originally. 3. The Seller s Disclosure and MLS listing incorrectly stated that sewer serviced the property. 4. Brand X subsequently sold the house. 5. After the new owners moved in, the septic malfunctioned and they discovered that the property was actually serviced by septic, rather than sewer as represented. Result: The new owners sued Weichert and the former owner to recover costs of repairs to the septic. To learn more about this case, click on the red box. What went wrong? In this case, the Sales Associate was not knowledgeable of the different types of waste disposal systems. The Associate did not review the files for previous transaction of when he sold the house two years prior. To learn about what should have been done in this case, click on the green box. What should have been done? Decide on what the Associate should have done by clicking on the relevant choice. A. Sales Associate should have been more diligent in inspecting the property thoroughly to identify the type of waste removal system, checking public records, and reviewing previous transaction file for any discrepancies. B. Sales Associate should have reviewed the contents of the Seller s Disclosure more closely with the sellers before proceeding with putting the data into the MLS. C. If Sales Associate uncovered the discrepancy, it should have been communicated to potential buyers as soon as possible. D. All of the above. The correct answer is D Copyright 2012, Weichert University Page 5 of 7

6 Case Study 2 1. A Weichert Associate represented a property that was previously under contract. 2. The contract never proceeded to closing or settlement, because an oil tank inspection on the property uncovered leakage. 3. Once the initial deal fell through, the Sales Associate continued to hold open houses and found prospective buyers for the property. 4. The Sales Associate never disclosed to these buyers the problem with the oil tank. 5. The prospective buyers proceeded to make an offer on the property, and it was accepted. 6. They had a home inspection, but not an oil tank inspection. 7. Once they moved in, they noticed that a bush near the oil tank was dying. 8. It was discovered that oil was leaking from the tank and poisoning the bush. Result: The buyers sued Weichert and the Sales Associate for repair of the tank and damages. To learn more about this case, click on the red box. What went wrong? In this case, the Sales Associate did not comply with the laws of disclosure. He was not diligent in explaining the implications of a leaking oil tank with the sellers, and failed to disclose this information to the prospective buyers. To learn about what should have been done in this case, click on the green box. What should have been done? Decide on what the Associate should have done by clicking on the relevant choice. A. Sales Associate should have explained to the sellers the implications of trying to sell a house that has a known oil tank leak on the property. B. Sales Associate should have had the sellers complete a revised Seller s Disclosure Form indicating the leakage. C. Sales Associate should have shared this disclosure and the information with prospective buyers. D. All of the above. The correct answer is D Copyright 2012, Weichert University Page 6 of 7

7 Case Study 3 1. A Brand X Listing Agent listed a home. 2. The Seller s Disclosure and MLS stated that the home was serviced by public water, although most houses in the area are serviced by wells. 3. A Weichert Associate sold the home. 4. The new owners believed their home was serviced by public water. 5. During a backyard BBQ a few months after moving in, a guest discovered a well on the property. 6. It was determined that the water source had been coming from the well. 7. The well was immediately tested and found contaminated. Result: The Owners sued Weichert and the Sales Associate for damages. To learn more about this case, click on the red box. What went wrong? In this case, the Sales Associate was not diligent in verifying the water source for the property, considering that its water source was unique to the area. As a result, the Associate misrepresented the property and exposed the new owners to a substantial health hazard. To learn about what should have been done in this case, click on the green box. What should have been done? Decide on what the Associate should have done by clicking on the relevant choice. A. Sales Associate should have verified the source of water on the property since most properties in the area are serviced by wells. B. Sales Associate should have disclosed to the buyers that the property was serviced by a well. C. Sales Associate should have explained the importance of well-testing to the buyers. D. All of the above. The correct answer is A In this course, you learned: They key features of the Seller s Property Condition Disclosure Statement and what you need to comply with it How to explain the Seller s Property Condition Disclosure Statement to your clients How to ensure that your clients complete the Disclosure Form fully and accurately Ensure that the Disclosure Form is fully completed by all parties and inserted into the office transaction files. Copyright 2012, Weichert University Page 7 of 7