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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Do I have to sign paperwork to see a house?

In the market to buy a California home? You may be surprised to find that you’ll be required to sign paperwork to get into the property for a viewing. This is part of the coronavirus impact on real estate sales and is likely to be part of the normal home buying process for awhile.

Do I have to sign paperwork for a buyer broker agreement? What is required?

You'll need to sign paperwork to view homes during the pandemic

No, the paperwork required is not a buyer broker agreement at all. Instead, it has to do with the pandemic, your safety, and the safety of anyone else living at or visiting the home. (Read more about a buyer broker agreement here.)

First, something you don’t sign:  The seller’s agent is supposed to provide your real estate agent and you a document with the safety protocol for your visit. It’s often referred to as the “prevention plan” or  “best practices”. That form provides info on safety rules and tips as well as what the listing agent or seller will due to help insure your safety during your visit.

For any listing agents who are Realtors, you can use this form provided by the California Association of Realtors: “Real Estate Best Practices Guidelines and Prevention Plan for Showings During COVID-19 – Stage 2 Expansion”  (C.A.R. Document BPPP, 5/25/20).

While buyers do not sign this, they are supposed to receive the prevention plan before they sign the 2nd document. The listing brokerage does sign it.

From my experience and what I am hearing, there’s quite a bit of confusion over this form, and very few listing agents are sending this out. What might be smart is simply including it or the company’s alternative in with the disclosure package, or make it accessible via the private agent remarks along with instructions about having the buyers sign paperwork prior to the showing.

Second, you must sign paperwork for entry: The buyer’s agent is required to get you, the home buyer, to sign a 2 page form, “Coronavirus Property Entry Advisory and Declaration – Visitor” (C.A.R. Document PEAD-V, 5/27/2020). Again, this is supposed to happen after you receive the safety protocol. (more…)

Digging deeper with disclosures

Often the extensive Silicon Valley disclosure paperwork answers most questions that a home buyer has, but sometimes not 100%. Here are a couple of thoughts for getting a little more information regarding disclosures on the property and area.

 

 

 

 

What does “et ux” mean in the preliminary title report?

Et uxOne day you find yourself reading a preliminary title report or other document, such as a deed, relating to a house or other property that you want to buy or sell.  You are understanding most everything and feeling fine until suddenly “et ux” shows up after a name, like George Jone et ux.  What is that, Greek, Latin, ancient English?  A typo, maybe? And what is it doing in your real estate related paperwork?

As it turns out, I did study Latin at Saratoga High School back in the 70s, and I even remember some of it.

Et ux is short for “Et uxor”, or “and wife”.

Today we would normally see people named “Joe Schmoe and Mary Smith Schmoe”, or some other variation with both names provided rather than “Joe Schmoe and wife” (a name plus a role).

Does it ever go the other way?  Not so much, but if you want to turn the tables, the phrase is “et vir” for “and husband”.

What happens after a purchase offer is submitted?

what is happeningIn the San Jose area, probably 90% or more of real estate purchase contracts are emailed to the listing agent by the buyer’s agent.  In the old days, the standard of practice was to have a live presentation by the buyer’s agent to both the listing and agent and the seller(s). Can the buyer’s agent present the real estate purchase contract directly to the seller and listing agent in Silicon Valley? Yes – it’s just not so common anymore.

Either way, what happens after the contract has been delivered or presented?  If it’s a live presentation, the buyer’s agent will be asked to either leave and be called later (or emailed) or requested to take a seat in the lobby (or in his or her car, if at the seller’s home) and wait while a private discussion happens between seller(s) and listing agent.  From there, it could be some questions to clarify why things are a certain way (such as a low initial deposit, a long escrow or long contingency time frames).   Questions aside, the response could be quick if it’s a super clean offer and the only one presented (or in the wings).  Conversely, it may be several hours, or possibly longer, before hearing back with an acceptance, rejection, or counter offer.

It’s similar with an email presentation.  You might get questions or clarification requests right away (ideally one call with all questions, rather than a stream of them over several hours) coming from the agent and/or seller through the agent.  Or you may not get much other than an acknowledgement that the paperwork was received.  You may find yourself waiting and waiting….

What’s happening behind the scenes if the response is not forthcoming in a short period of time? (more…)

Can the buyer’s agent present the real estate purchase contract directly to the seller and listing agent in Silicon Valley?

Real estate contracts welcomeIt has become the norm for Silicon Valley residential real estate contracts to be emailed from the buyer’s agent to the listing agent.  In years gone by, that wasn’t the case – “live presentations” were the norm instead.  The buyer’s agent would ask the listing agent to set up an appointment and the two of them plus the seller(s) would meet, usually at the listing agent’s office but sometimes at the seller’s home, for this offer presentation. There are many advantages of presenting and receiving offers in person, despite its current lack of popularity.

The shift came with the prevalence of email and the privacy presumed to accompany it.  For awhile before email took off, some real estate professionals were faxing offers.  That saved time but seemed risky on a couple of levels.  It never seemed very secure until efax came along (taking faxes directly to one’s email). Most faxes in the early days of using that machine belonged to the office. Anyone hovering by the fax machine could see very well the paperwork coming through.   Just as seriously, though, it took away the ability to read the situation in person, to answer questions or to make a positive impression that would help the buyer’s odds of success. It was cold and impersonal.

Today, most Realtors presume that offers should arrive by email.  The better ones will ask: “How would you like to receive my offer?”  The openness to dropping off a sealed offer, present to the agent, present to the agent and seller, email, fax, or have delivered by courier pigeon – ok, kidding on the last one – indicates a willingness to go the extra mile and to get it done. (more…)

Who should be at the sign off or closing in Silicon Valley?

See you thereReal estate practices vary from state to state and in the case of California, even from one region to the next.  How the settlement or closing appointment goes is one of them.

Many of my east coast friends and relatives have told me that when they close on realty transactions, everyone goes to the same table – buyers, sellers, the attorneys for each and the real estate agents for each.  Not only do they all meet in one room to finalize the deal, but when it’s over, the property transfers title right then.

Not so in Silicon Valley!

Here in northern California, buyers and sellers sign off separately, and almost never are lawyers involved.  The closing or sign off happens 5-7 days prior to the deed being recorded and title transferring.  The buyers often have both their real estate agent and their lender present to answer any questions.  This final paperwork is most often done at a title company’s office.  Also for the seller, it’s usually at the title company and the agent is present.

What happens on the day of closing, then?  There are two main events that take place on the day that escrow closes and the real estate sale is finalized.  First, the title company gets the deeds recorded with the County of Santa Clara.  One employee goes to the county recorder’s office and gets each deed recorded for that company’s closings.  When finished, he or she phoned the branches and confirms that recording did take place.  The escrow officer or assistant will then call (sometimes email) the Realtors or licensees involved and tell them “we have confirmation – we are on record”.  The agents, in turn, notify the buyer(s) and seller(s).   The second thing that happens is that the new buyer gets keys to the home!  This is true even if there is a rent back, since the buyer is now a landlord, even if it’s just for a little while.

 

 

Writing a good purchase contract takes time

Why is there so much paperwork required?With the crazy low inventory and high buyer demand in Silicon Valley today, it’s more important than ever to write a thoughtful, clean offer so that you do not lose out in multiple offer situations.  When I am on the receiving end, that is, when I’m the listing agent on a house or home which gets lots of bids, it’s easy to eliminate some offers quickly. Don’t let it happen to you!

What can make your offer not have much of a chance of acceptance or even for receiving a counter offer?  Price is always a big deal, and so are the main terms around issues like repairs, time frames and of course the amount or percentage of cash down payment.  But you might be surprised at the little things that sloppy buyers and their agents do wrong. They can be tie breakers, so don’t undervalue them.  Here’s a quick list:

  1. Not including a pre approval letter
  2. Not including a copy of the initial deposit check
  3. Not making the initial deposit for a full 3%
  4. Not pulling the disclosures before drafting the contract (more…)

Why Is There So Much Paperwork When Buying or Selling a Home in Silicon Valley?

Why is there so much paperwork involved in California real estate transactions? Artwork by Clair Handy (by permission)Buying or selling a Silicon Valley home? Be prepared for an onslaught of paperwork.  There will be many questions you’ll be required to answer carefully (if selling) or to read and understand thoroughly (if buying) plus many other documents such as  inspections, reports, and boilerplate (templated or generic) disclosures.  Sometimes the language used will be technical or complicated, so you may need to do a little research as you see the questions.  Here’s a list of some of what you’ll be reading or responsible for completing or ordering, not necessarily in this order:

  • the purchase agreement, any addenda & contract disclosures (appx 12 -20 pages in most cases)
  • a preliminary title report and possibly CC & Rs (Covenants, Conditions and Restrictions)
  • if the home is a condo, townhouse or PUD, docs pertaining to the home owner’s association (can run hundreds of pages)
  • the standard disclosures common in our area which require the seller to answer questions about the home, yard and area (appx 15-25 pages)
  • a natural hazard report (stating whether the home’s in an earthquake zone, flood plain etc.), environmental hazard report (whether there are leaking underground storage tanks and such), tax report (any extra bonds or assessments that will show up on your property tax bill) and other area disclosures ordered by the seller and provided by a company such as JCP, Property ID and other firms (appx 80 pages)
  • inspections: usually pest and home are ordered, often also chimney, roof, possibly others such as pool or other specific components of the home (varies but often at least 40 or 50 pages, frequently more)
  • for buyers: disclosures on their loan
  • for sellers: the listing agreement and disclosures related to it
  • at the time of signing the final papers: escrow instructions and lots of forms for transferring title – you will also see the reports seen previously too
  • additionally, some real estate brokerages have a lot of their own disclosure forms too
  • if the sale is a relocation, there will be a lot of relo papers to complete as well
  • if it is a short sale or bank owned home, you will have extra paperwork for that also

By the time it’s all said and done, you will have reviewed several hundred pages of paperwork that are several inches high if stacked. All of this can make consumers a little bit crazy, particularly when there forms which are very nearly duplicates. (It may be a little less if it’s a trustee sale or probate, but only a little less.)

Why is there so much of it?
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What Do You Need to Know About Disclosures when Buying or Selling a Home in California?

A colleague of mine sometimes asks me to help teach a course he offers on Real Estate Practice (one of the requirements for getting a real estate license) at West Valley College in Saratoga.   He’s been giving this weekly class for a few years now,  and several times I’ve come in to instruct on the broad topic of disclosure (or “disclosures”) for the 2-3 hour session.  It’s very interesting and a fun topic to for me cover because it reaches into some uncommon, yet critically important, areas of discussion in real estate.

What is “disclosure”?

Disclosure is affirmatively offering information that a the other party in a real estate transaction (and the other party’s agent) would want or need to know to make an informed decision on the realty purchase or sale. Often, this information is not easily apparent.  Most of the time, disclosure refers to the seller’s obligation to disclose in particular.  That will be our focus in this post: the seller’s disclosures.

disclosure omission may be fraud

The sellers obligation to disclose is not the same everywhere.

Disclosure laws and practices vary from state to state, both in terms of what must be disclosed and, sometimes, what must not be disclosed. Sometimes it’s a “don’t ask, don’t tell” situation. My comments here refer to the practice in California, which may be different from other states.

Silicon Valley has varied issues which must be disclosed. Some of them are regional (rather than particular to one home in particular). Some of what must be disclosed is a “natural hazard” and some is an “environmental hazard”.  Other issues might not be hazardous, but instead a nuisance.

Next, find some examples of regional things in the Santa Clara Valley that might be disclosed. In the south county areas of Morgan Hill and Gilroy, disclosure issues will include the farming and crop dusting. In some of the newer, downtown San Jose loft communities, there will be disclosure about the proximity of trains and their late-night runs nearby (horns blaring).  In Cupertino, Los Gatos, Monte Sereno, Saratoga, Almaden Valley, and may areas near hills, there may be disclosures about high water tables, water runoff, and damp crawl spaces.  Remote areas all around Santa Clara County may report a requirement to clear brush within so many feet of structures for fire safety.

Throughout Silicon Valley, we have some constants that should be disclosed. Issues here that the seller needs to tell the buyer include the fact that sometimes we have drought years and cannot water our lawns when we want.  Also, we have expansive clay soils and that is important to know regarding proper grading – do it wrong and your foundation may suffer.  Earthquake fault zones and other natural hazard zones also must be disclosed to buyers. (You would want to know if you were buying a home on the San Andreas or Hayward Fault, wouldn’t you?) Forms and ordered reports do address most of these issues, luckily!

Forms are a big help, but they have limits.

There are forms – lots and lots of forms, particularly when buying or selling a home in Santa Clara County or Silicon Valley – that can help with the obliation to disclose. But what has to be disclosed isn’t necessarily written on the form. The form is just an aid to making that full disclosure.

How does a seller know when something must be disclosed?
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