Home Disclosures – What’s Missing Here?
December 2, 2011
I Forgot to Remember.
Having a selective memory may be OK for certain things, but not when it comes to filling out the disclosure packet when you're preparing to sell your house. One of the less glamorous roles that I have as a Realtor is to read disclosure packets — LOTS of them. If you've ever read through a complete disclosure packet, you know what I'm talking about. But I am constantly amazed at how many times I see obvious things that should have been included in the owner's disclosures, and they're simply not. These omitted items can be things that I see that are obvious about the condition of the house, or that pertain to the location of the home that I know from living in this area for so long.
Are these owners simply forgetting to disclose these items, or is “selective memory” coming into play. Well, as we'll discuss below, neither is a valid excuse when it comes down to resolving a dispute after the sale.
Ample Opportunity to Disclose.
When a home is listed for sale, there are a whole slew of forms that the seller is legally obligated to complete. Two of these in particular focus solely on the past and present condition of the home, and the characteristics of the neighborhood around the home: These are commonly known as the Transfer Disclosure Statement (TDS), and the Supplemental Seller's Checklist (SSC). These two forms together comprise 12 pages of very detailed questions about the house and the neighborhood — and it's written in nice teeny-tiny font, so that they can continue to cram more questions in every year. There's even a section where the listing agent can put in their own additional 3 pages of wisdom — the Agent's Visual Inspection Disclosure (AVID).
Those 12 pages of questions lead the seller through an entire dissertation about the condition of their home; what improvements they've done to the home (with or without permits), and problems they've encountered with the home, neighborhood or environmental issues, etc, etc…. You name it, it's in there. And if you're playing close attention, you'll notice that some questions are essentially re-phrased and posed again in different sections of the statement — just to help jar that darned selective memory.
So what issues seem to be commonly missing in these disclosure statements?
Here are some of the more common things that I see conspicuously absent from many disclosure statements:
- Repair Work. While most people are pretty good about disclosing the major repair work that was done to the house (room additions, kitchen remodels, new roof, etc…), they're not usually as diligent about reporting the more minor repairs — hot water heater replacements, appliance repairs, un-permitted bathroom remodeling, fences, etc.. My all time favorite is cracks in the walls that are patched and painted in preparation for selling the home. Do you think the new buyer should know about these???
- Chronic Deficincies: These are conditions that regularly happen with the home — the plumbing frequently backs up (that's a biggie), or the circuit breaker trips ever time you turn on the microwave, or that water pools up in the garage every time it rains… You'd be amazed at how often those things don't get mentioned at all in the disclosures.
- Catastrophic Incidents: Remember when the pipe broke and kitchen flooded in 2005? Or how about when the tree branch fell and damaged the back bedroom? It's funny how those things are so easily forgotten.
If there aren't enough issues to tackle with the house itself, you also need to be cognizant of what's happening around your house too. Here are the more common things that somehow fail to get mentioned in the disclosures.
- Bad Neighbor. Have a grumpy neighbor who complains about everything you do? Or, how about the night-owl neighbor who thinks it's their eminent right to hold loud parties every summer weekend until the wee hours of the morning? Arguments over fences are always fun, too. But it's mind-boggling how often this isn't mentioned at all in the disclosures.
- Noise. There are at least 6 different questions in those 12 pages to talk about noise-related issues that the new owner should be aware of. Planes, trains, and automobiles. School noise. Parks. Dogs barking. How can seller's how live 3 blocks from the Caltrain tracks not mention the train at all? It happens…
- Traffic. Traffic varies widely throughout San Carlos, and there are certain streets that just get way more traffic than others. Having lived in this town for over 20 years, I'm lucky enough to know which ones they are. But a prospective home buyer from out of town may not. Also, homes that are located close to schools or parks are subject to conditional traffic issues– school drop-off and pick-up, athletic events, Hometown Days, etc..
Forget at Your Own Risk.
Ask any attorney who specializes in real estate litigation, and they'll tell you that disclosure issues (or lack thereof) are by far the leading cause of real estate lawsuits. Yet, for whatever reason, the items we discussed above — and often many more — are frequently left out of the seller's disclosure packet. Sometimes the omission is intentional, sometimes it's not.
But neither excuse will protect you in a court of law. Knowing and not telling is easy to prove, and can also be spelled F-R-A-U-D. And the “I Forgot” excuse never worked with school homework, so it definitely won't work with a cranky judge in a courtroom.
Got A Disclosure Nightmare?
Do you have a good story about something that should have been disclosed when you bought your home….but wasn't? Share that with us in the comment section!