Questions and answers about: DISCLOSURE
Q: Do Sellers of HOA affected properties typically fulfill their obligation to DISCLOSE?
A: Our statistics show an alarming percentage (almost 100%!) of sellers who are legally obligated to give the buyer of their property specific disclosures, mandated by the Davis-Stirling Act, do not comply with ALL of the required disclosures.
Q: Why Not?
A: Sellers are not experts in disclosure. They typically rely on the information supplied to them by third parties. Real Estate Agents, Title Company Officers, Home Owners Associations, HOA Management Companies all have a different perspective of disclosure; some see it as a necessary evil, while others might wish to present a better picture of a property than their information would show. They might willfully withhold bad information.
Q: Why is disclosure compliance important?
A: In a word, LIABILITY. If a buyer is not fully informed in a timely manner under the law, the door is opened for him/her to seek damages for both non-compliance and non-disclosure of any material facts.
Q: Who is responsible for COMPLIANCE?
A: The law states that the seller is responsible for compliance. Also, that anyone who willfully withholds information required by the law is liable. Our best guess is that anyone involved in the real estate transaction that has specific knowledge about the requirements of the law, and does not act to attempt to fulfill those requirements, creates some level of liability. In some cases, agents are presumed to know.
Q: What IS compliance anyway?
A: The Davis-Stirling Act is specific as to the form and content of the necessary disclosures. There are 26 specific disclosures required by the law. Most professionals are familiar with the general contract requirements such as CC&Rs, Articles of Incorporation, and By-Laws. There is somewhat less familiarity with Operating Budgets and Reserve Requirements. But there is an almost TOTAL unfamiliarity with what it takes to evaluate the information! Also, is the HOA operating according to the law? Has the HOA provided ALL the disclosure information?
Q: What is the PURPOSE of the law?
A: The purpose of the law is to at least make sure that a prospective buyer receives all of the documentation necessary to make an informed decision prior to the close of escrow. As odd as it may sound, buyers seldom receive the required documentation; and they are unaware when they have received information that is incomplete through either ignorance or deception.
Q: Who determines who is liable when information is not disclosed?
A: Most often it becomes a lawsuit. If that happens, then a judge, or a mediator, will place some amount of responsibility on whomsoever HE/SHE decides. Currently, the professionals involved in these transactions have escaped large liability claims; however, that could change at any moment. There will certainly be a perception of error or omission when the ability to aid a seller/buyer in complying is available to a professional; but that professional doesnt offer the information to their Principal. Its about "due diligence"!
Q: What is the SOLUTION to the Davis-Stirling Acts required disclosures?
A: The HOA Document Review "Compliance Review". The HOA Document Review system offers concrete evidence that your seller has, in good faith, requested all the required disclosures. It shows which disclosures were received and which were NOT! It provides an organized format by which the buyer can review the disclosures. It gives the seller (and his/her agent) the Peace of Mind that FULL DISCLOSURE brings to any Real Estate transaction.
Q: Why should SELLERS use our System?
A: To reduce LIABILITY!!! And to ENHANCE VALUE (during negotiations)!!! As the Professional, that your sellers rely on, you should let them know about HOA Document Review. Its complete, simple and affordable!
Q: What do I need to do?
A: Inform your seller of DisclosureLine’s service. Have the seller sing the REQUEST FORM , Fax the completed Request Form to DisclosureLine, Mail the original Request Form & a check for $325.00 payable to CA DataSource to HOA Document Review, 331 Pierce Road, San Jose, CA 95138-1403.
NOTE: Seller may be responsible for fees charged by HOAs and/or Management Companies responsible for supplying documents. Timely payment of these fees, by seller, will effect timely completion by HOA Document Review. Therefore, Sellers are best served when they order our service at time of listing.