Safer Seller Disclosures During COVID-19
Safer Seller Disclosures During COVID-19
The challenging circumstances faced by clients today creates a unique opportunity for agents to stand out from the crowd and demonstrate their expertise. The California Stay At Home Order in response to COVID-19 puts an emphasis on the need for proactive client communication and diligent attention-to-detail to ensure all sales stay on track. This is especially true for seller disclosures, where it’s even harder to protect yourself and the home seller when you cannot meet in person and a mistake can have significant financial implications. Last week, Glide teamed up with C.A.R. and Spile, Leff, & Goor LLP to share updates on the current market and reinforce best practices for both sellers and agents. You can watch the full 1-hour webinar here. This post is dedicated to answering some of the most important questions that came from our audience.
This content is being provided for informational purposes only. Nothing contained herein shall constitute legal advice or representation. Although the information relates to legal issues, no attorney-client relationship is created between you and Glide, Glide’s representatives or counsel. This does not replace your need to consult with an experienced real estate attorney to better understand your legal obligations. These questions were answered by C.A.R. Legal Counsel and Steven Spile of Spile, Leff & Goor, LLP.
Should we all be using the new COVID-19 Addendum on every transaction?
The COVID-19 Addendum is not mandatory and it would depend on each transaction. Talk to your brokerage attorney and management of your brokerage to determine the usage in each situation.
What should we say to clients that still want to do a final walk through of the property?
You need to start off with a reminder that the March 19 California Stay At Home Order issued by the Governor does not contain an exemption for either real estate licensees or home purchasers. Thus, for your safety and that of others, your agent will not make arrangements for an in-person final inspection, even if you want to ignore the Order and make the inspection yourself. Your options depend on the circumstances. If a walk through is needed, the parties can conceivably have the seller walk the property with facetime or other video transmission and the buyer can perform their walk through on a virtual basis. It is also possible to waive the final inspection. However, in that case, the buyer may not discover if the seller has failed to comply with the contractual obligations until after the sale closes and the buyer moves into the property. It is also possible to seek an extension of time to close escrow, which would automatically delay the time for an inspection. By the end of the delayed time possibly the Order will be lifted or amended, If the buyer chooses the facetime or video transmission type of walk through, document the buyer’s decision and make sure that the buyer acknowledges that this is not the type of walk through that is recommended by the agent.
How can you perform an AVID when you are not allowed into property due to COVID?
You can have the seller, or someone else who is permitted in the property, like for instance a plumber or contractor to perform required, necessary work, facetime or video all areas of the property to assist you in your disclosures. If you choose to do this, however, you must advise the buyer that this is not a thorough investigation and was limited to a video inspection because of the COVID-19 situation.
How do I best stay updated on how a transaction is impacted by COVID-19?
We defer any and all matters to C.A.R. and you should as well. You should be paying careful attention to any and all positions that they take. This is a very fluid situation and it is important that you keep yourself informed.
How involved should an agent be when the TDS explicitly says that “The following are representations made by the Sellers and are not the representations of the Agents."
The recommendation is that agents should carefully explain the form, and the importance of providing full disclosures of any and all issues addressed by the TDS + SPQ. Agents should not be responding on behalf of their clients. These answers must be from the client, not the agent.
How far back does a seller need to disclose? If there was a repair done 3 years ago, do they need to disclose? 5 Years? 20 years?
This would depend on the circumstances in each transaction. Needless to say, the more serious the issue, the more important it is to disclose the matter. For example, a big issue that was not properly resolved many years ago is likely just as material as a smaller, recent, issue that has not been addressed at all. The best practice would be to disclose everything, regardless of how long ago it was.
Do you need to disclose a defect if it was already there when you purchased the property?
Absolutely.
How do you properly disclose a water-related issue when there is a dispute over the cause and who is responsible?
You should put the various explanations and the source of those explanations in your disclosure document. Most importantly, you should strongly advise the buyer to have the issue diagnosed by appropriate experts. This would apply to any and all alleged defects.
I have seen agents write things like "Good", "OK", and "Normal wear and tear" on the AVID. What do you think about these answers?
Agents should never say anything positive about the property in the disclosure forms. It is not a marketing device. The same applies to sellers on seller disclosure forms. If you do not see anything in a particular room, or with respect to a particular part of the inspection, you can say “nothing noted”.
Do you still need to complete the TDS + SPQ on a fix-and-flip property?
Yes, they must be completed.
What should we have home service providers and inspectors sign if they visit a property?
There are various waivers that different companies are using throughout the industry. My recommendation is that you contact an attorney and have them review waivers that are already in the industry and / or prepare one themselves.
What is a seller responsible for disclosing if they are a member of an HOA? It can be difficult to understand the full state of the building when a seller only owns 1-unit.
There is a responsibility to provide all HOA documents, which are generally easy to acquire. If there is an issue, you should immediately advise all parties to talk to their attorneys to make sure that the matter is properly resolved.
By using this product, will E&O providers give a discount?
Many insurance carriers do provide reduced rates for risk management efforts such as Glide. You should talk to your insurance broker about getting some form of price adjustment.
***For example, Glide’s partnership w/ RealCare saves specific policy holders 50% off their deductible (up to $5,000) when the software was used to prepare property disclosure forms. Learn more here.
