February 2004 ( Palm Springs , Calif ) – “ If the buyer doesn't know, why should I tell them?” asks the home seller anxious to close the deal. The California Real Estate Inspection Association strongly urges home sellers to disclose before they close. The expression, "when in doubt, point it out" certainly holds true for sellers; it is a good practice for sellers to err on the side of over-disclosure.
The best answer to any disclosure question is to disclose all that you know or that could possibly be of concern to a buyer. If a problem has been thoroughly repaired, there is no reason to withhold the information. Most buyers will appreciate the fact that you are being so thorough in your disclosures. This approach can help to assure buyers that they are dealing with someone who is honest and who is trying to do the right thing.
What about simply putting "As Is" in the sales contract to protect against repair demands ? There are some misconceptions regarding the so-called “As Is” sale of real estate. When a seller states they are selling the property “As Is” , this does not relieve the seller of certain responsibilities under California law relating to the sale or transfer of ownership of real estate. In an “As Is” transaction where the seller does not warrant the condition of the property, the seller is still required to disclose all known material defects to a buyer. A property being sold “As Is” is really being sold “As Is…As Disclosed” . Merely inserting “As Is” terminology into the listing does not relieve the seller of the burden of disclosing defects. It is also a common error to think that disclosure alone relieves a seller from the burden of certain repairs. An "As Is" sale does not exempt the seller from the need to comply with the law – such as requiring a working smoke detector and at close of escrow, and does not exempt them from the law requiring water heater strapping.
But there's good news! Most buyers, upon knowing all the facts, seldom back away from their purchase decision. It is the fear of the unknown, followed by its eventual discovery, which sends people in court. “Peace of mind" is very relevant in the sale and transfer of residential property…it is the prime reason for including a qualified home inspector in the sales process.
Sellers should always obtain an independent professional property inspection to know the current condition of their property. Begin by hiring the most qualified home inspector in your area. Once you've got the inspection report, attach a copy to your disclosure statement. Furthermore, explain in your disclosure statement that every effort has been made to discover and report all problematic conditions, but that you urge the buyers to hire their own home inspector, just in case, to ensure that no significant defects were missed by your inspector. In this way, you will have documented an unusually high degree of willingness to disclose all problems. In the unlikely event that surprise defects should surface after the close of escrow, it would appear unlikely that you had deliberately concealed the problems (and should a conflict proceed to legal action, your position would look very good to any fair minded judge).
Home sellers can reduce liability by using a CREIA Inspector member to do a thorough, independent visual examination of the physical structure and systems of a home. To locate a qualified CREIA inspector near you, call CREIA at (800) 388-8443, or visit their website at www.CREIA.org . Since 1976, CREIA, a non-profit voluntary membership organization has been providing education, training, and support services to the real estate inspection industry and to the public. Inspectors must adhere to CREIA's Code of Ethics and follow the Standards of Practice developed by the association. These Standards of Practice have been recognized by the State of California , and are considered the source for Home Inspector Standard of Care by the real estate and legal communities.
CREIA requires its members to successfully pass a comprehensive written examination of property systems and complete 30 hours of continuing education each year. Members can accumulate credits through various sources of education including monthly chapter meetings, conferences, and other approved activities. CREIA keeps records to ensure that members are complying with the requirements. Educational topics cover a variety of technical subjects including updates and advances affecting the profession of real estate inspection. CREIA is dedicated to consumer protection and education.