Disclosing death on a property

Disclosing death on a property - woman completing paperwork with image of house in the backgroundDisclosing death on a property is required in California home sales for 3 years after the person passes. The Seller Property Questionnaire asks if the seller is aware of:

Within the last 3 years, the death of an occupant of the property upon the property (yes / no)

(Note to seller: The manner of death may be a material fact to the Buyer, and should be disclosed, except for a death by HIV / AIDS.)

Some points to note regarding this form and disclosing death on a property:

  • The question does not say “in the house” or “in the garage”, but upon the property. Included is anywhere within the property boundaries.
  • If someone died further back than that, the seller is obligated to answer truthfully if a buyer asks if there was ever a death on the property.
  • Oddly, it specifies “an occupant” of the property rather than any death at all. I suspect that any death would be of interest to a buyer, and possibly a material fact. An attorney would be the best person to answer that question.

Deaths from crimes, or which would be a stigma, such as a suicide or murder, should be disclosed even if it’s been more than 3 years since that’s an issue which may materially impact value or desirability. There’s no question on the disclosure forms that asks this. It falls under the general requirement to disclose anything that a buyer may be  seriously concerned about, such as a stigma.

What about disclosing death on a property which is part of a condo complex?

First, it’s important to understand that detached homes, townhomes, and condo units that look like apartments can all be condominiums – condos are a type of ownership. They aren’t an architectural style. The comments below MAY apply to townhomes, or possibly other types of structures, if that home is held in condo ownership.

With condominium ownership, the owner owns the interior airspace of the living area (sometimes also the garage, but sometimes not) and owns a percentage of the common areas of the parcel. The condo owner is a partial owner of the entire parcel or property.

If there’s a death in a condo complex in the common area, will that be shared in the disclosures? It should be, whether the death was inside the unit for sale or anywhere within the common area of the parcel boundaries.
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NEW California Disclosure – Home Fire Hardening Disclosure and Advisory

Fire Hardening and Defensible Space Advisory Disclosure and AddendumJust about every year California amends what sellers are required to disclose, and one change that I think we’ll be seeing a lot of is about home fire hardening. Many agents, including myself, will begin to use the fire hardening disclosure / document (which has already changed once in six months). The current one, as of June 2021, is the C.A.R. Form FHDS, 5/21 Fire Hardening and Defensible Space Advisory, Disclosure, and Addendum.

So what is in this document, who will have to use it, and how can it help buyers and current home owners?

The CAR Fire Hardening and Defensible Space form is a two page document completed by the seller of a residential non-commercial property to notify the buyer of fire hazard zoning, code compliance, and possible vulnerabilities and/or defensible features. Both the buyer(s) and seller(s) sign to acknowledge receipt and consent to comply with the appropriate terms in paragraph 4B.

Who Will Use This Form? Paragraphs 1 and 2: Prerequisites

This disclosure is required for homes (1-4 unit residential properties) in high or very high fire hazard severity zones when the seller must complete a Transfer Disclosure Statement (TDS form). Sellers for California real estate transactions falling within those criteria are obligated to provide specific information contained in this form to the buyer. If these properties were improved or were built before January 1, 2010 there are additional stipulations. However, use is not restricted to properties in these zones.

Owners of residences where the zone is unknown, or those outside of the designated fire hazard zones which are “in, upon, or adjoining a mountainous area, forest-covered land, brush-covered land, grass-covered land, or land that is covered with flammable material,” (Gov’t Code 51182 and 1C in CAR FHDS 5/21 – basically, homes in or near ample kindling) should also make these disclosures if they might be considered materially important. Even when it’s not legally necessary, any homeowner might voluntarily disclose using sections of this form. To show that a home is not in a designated high or very high fire hazard severity zone, sellers simply check the box indicating so in paragraph 2B.

Is the address in a high or very high fire hazard severity zone?

Not all homeowners know if their property is in one of these zones, but it’s the seller’s responsibility to find out! In paragraph 1B the form suggests that a natural hazard zone disclosure company could determine this information (and if you’re selling you may have already ordered a report that would contain those details), but it certainly isn’t the only resource.

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Does it matter whether your real estate purchase offer is on a PRDS or CAR contract?

Real estate contracts welcomeIf you are home buying or selling in Silicon Valley, the odds are good that your area is one where the contracts and forms could be either the PRDS set or the CAR set.  Does it matter which one is used?

Weary home buyers who’ve written multiple offers on one set of forms would really prefer to not switch and suddenly need to learn a new set of terms, risks, and benefits that come with each.  The majority of Realtors representing sellers, who are listing agents, will accept offers on either one.  Not all will, though, so it’s important for the buyer’s agent to read the MLS instructions and to communicate with the listing agent ahead of time to make sure.

There are many differences between the PRDS and CAR real estate contracts.  The biggest one is that the PRDS contract by default requires that the property be delivered to the buyer in a certain conditon (unless the As Is box is checked) while the CAR contract is by default an As Is agreement. But there are many other issues too.

These contracts also reference other forms from their same set of documents which will be important to the sale.  For instance, the CAR contract requires that the seller fill out a particular disclosure form along with the Transfer Disclosure Statement:

10 A (4)  Within the time specified in paragraph 14A, (i) Seller, unless exempt from the obligation to provide a TDS, shall, complete
and provide Buyer with a Seller Property Questionnaire (C.A.R. Form SPQ)

The PRDS contract, by contrast, requires the PRDS Supplemental Seller’s Checklist.  They are not interchangeable unless all parties agree in writing to the substitution.

If a seller’s disclosures are all on PRDS forms, it’s easy to infer that the seller or listing agent prefers offers on the PRDS contract OR that adjustments may need to be made to keep the seller from having to fill out yet another form after completing the presale disclosure package. Otherwise, giving a CAR offer on a listing where PRDS disclosure forms have been used puts an obligation on the seller to complete another new disclosure.  At best, this may generate a counter offer from the seller. If your offer is neck and neck with another, this could potentially harm your negotiating position in a multiple offer situation.

 

Related reading – older articles (the forms have changed a little since these were written):

Did You Know that You Have a Choice in Which Forms Are Used to Buy & Sell Homes in Silicon Valley? (2009, this blog)

What is the difference between the CAR and PRDS purchase agreements? Does it matter which contract is used? (2011, this blog)

 

Market activity in Santa Clara County:

 

 

 

When buying a home, are they counting calendar days or business days?

Question_markIf you are purchasing a home in Silicon Valley, and you’re fortunate enough to be “in escrow”, will you be counting the calendar days or the business days to know when something is due?

Most of the time, it will be calendar days.  But not always.  I’ll explain.

First, I have to mention that in Santa Clara and San Mateo Counties, we have two different sets of real estate forms in use and they do not handle this issue of days exactly the same.  The PRDS contract is found primarily on the Peninsula and following the coastal range south through Cupertino, Saratoga, Monte Sereno, and Los Gatos.  In most other places, though, the CAR contract is usually used.   For more information on the contract differences, please see What is the difference between the CAR and PRDS purchase agreements? Does it matter which contract is used? – though the forms have been updated since then and some of the differences may have changed some.)

There are a lot of dates that get tracked in both contracts: the amount of time for getting the initial good faith deposit to escrow (a title company is the norm here for escrow); the number of days the seller has to provide the buyer all disclosures, reports, and other info; the length of time (if any) for the buyer to remove contingencies, the date of closing, and more.

Initial deposit:  for both, 3 business days is the norm, but it is possible to change it to make it faster or longer (but if longer, it’s wise to have a really good reason)

Removal of contingencies:  PRDS is strictly calendar days.  CAR is calendar days unless they fall on a weekend, in which case it rolls to the next business day.

The real estate purchase contracts, and related addenda, disclosures, etc., changes frequently.   When there is a change, Realtors usually know about it via their real estate board, their office, and often from the marker of the forms.

Where to watch out (for Realtors especially):

If you or your agent is used to one of these sets of forms and suddenly need to use the other, (more…)

The FIRPTA Form Must Include the Social Security Number (or TIN)

FIRPTA ThumbnailLately I have been given a lot of incomplete FIRPTAs from listing agents in & near Silicon Valley with the request (or demand) that my buyers sign them.  They explain “we don’t have to provide the social to the buyers anymore”.  These well intentioned agents have mixed up two choices and provided something of a hybrid that cannot be used to satisfy the requirement of the form. Hence this post.

It’s not just happening to me and to my buyers. There’s an immense amount of confusion about how to properly complete and handle the FIRPTA form in California real estate sales.  Most of it would be solved if people (buyers, sellers, realty agents, transaction coordinators and brokers) would simply read it and not assume what the requirements are.  (Silicon Valley Realtors have long heard local real estate trainer Guy Berry admonish us in class to simply read the forms.  He scrawls in large letters on the board for his class on the purchase agreement: What does the contract really say?)

So let’s do that.  Let’s see what the Seller’s Affidavit of Nonforeign Status And/Or California Withholding Exemption really says. To begin with, I uploaded the 2 page FIRPTA document onto my Valley of Hearts Delight website, so you can access the entire document by clicking on the link (it will download into a new window – it’s a pdf).  You might be surprised, especially if you are taking your information second-hand and have not read this form yourself in the last two years. (And if in doubt about any of it, please contact a real estate attorney for clarification.)

What is the purpose of the Seller’s Affidavit or FIRPTA?

Why do we have this form at all? The very first part of page one answers this question. (Words in red are mine.)

Internal Revenue Code (“IRC”) Section 1445 provides that a transferee (buyer) of U.S. real property interest must withhold tax if the transferor (seller) is a “foreign person”.  California Revenue and Taxation Code Section 18662 provides that a transferee (buyer) of a California real property interest must withhold tax unless an exemption applies.

So for starters, we are told that buyers must withhold tax from the sellers unless an exemption applies when they buy real estate in California. That’s what this FIRPTA form is all about: it tells the buyer that there is an exemption.  By completing this form and providing it, the seller is giving an affidavit that he or she is not subject to the withholding tax for either the Federal Government or for the State of California. The buyer is off the hook for holding money back in escrow from the seller. (more…)

Did You Know that You Have a Choice in Which Forms Are Used to Buy & Sell Homes in Silicon Valley?

There are two sets of forms in use in the greater San Jose area (Los Gatos, Saratoga, Campbell, Santa Clara, etc.) for residential real estate sales:

CAR or California Association of Realtors forms and
PRDS or Peninsula Regional Data Systems forms

Although the two contracts or purchase agreements are very similar in some ways, they are also unique in others. Depending on the property in question and your wants, needs and goals, as well as whether you are a buyer or seller in Silicon Valley, you may prefer one of these over the other.

If you are involved in a investor seller or distressed property transaction in Silicon Valley (such as a short sale or banked owned home), you may be required to use the CAR contract by the lender since it’s a strictly “as is” agreement. The banks may also force the purchaser to use a long addendum – best if that’s the case to read it very carefully and possibly even consult a real estate attorney to make sure you understand what you’re being asked to sign.