disclosure Archives - Real Estate News and Commentary

September 4, 2019September 4, 2019

Home Buyer Beware

Whether you admit it or not, buying a home is a stressful endeavor. Even if you’ve purchased a home before, the process can be somewhat nerve-wracking and overwhelming. Taking time out of your already busy schedule to search and visit homes, as well as applying for a mortgage can make life hectic. So, who needs the added worry that that the home seller and/or listing agent is trying to hide something from you? Home buyer beware.

Maryland requires the home seller to disclose any known latent defects, regardless if they are choosing the disclosure or disclaimer option. To be clear, the Maryland Real Estate Commission’s Residential Property Disclosure and Disclaimer Statement states that a seller must disclose “Material defects in real property or an improvement to real property that: (1) A purchaser would not reasonably be expected to ascertain or observe by a careful visual inspection of the real property; and (2) Would pose a direct threat to the health or safety of (purchaser and/or occupant).” Regardless, there is still a “home buyer beware” atmosphere.

How can you proceed confidently with your home purchase if there is a sense of distrust? To counteract the home buyer beware phenomenon, focus on “trust and verify.” The concept of trust and verify is about taking disclosures at face value and exercising due diligence. To the best of your ability, confirm the accuracy of what is disclosed, as well as investigate any areas of concern. Many items can be verified online, or by calling the locality where the house is located.

Home buyer beware

Of course, you should always conduct a home inspection. However, prior to hiring your home inspector, ask about their scope and limitations of the inspection. Home inspectors are considered generalists, such that they are not typically an expert in any aspect of home construction, or the home’s structure and systems. However, they are trained to identify potential common problems. They will also recommend that you consult an expert for further information on anything that is outside the scope of the inspection. And although home inspector licensing laws prescribes minimum inspection standards, there is no guarantee that everything will be inspected thoroughly beyond a visual inspection (e.g., chimney or pool). Make sure your inspector meets your expectations so as to thoroughly inspect all systems of the home.

If the home was expanded, verify that additions and/or modifications to the home were permitted by the local jurisdiction. Unpermitted additions can create a number of issues, including having your lender deny your mortgage. It’s not uncommon for additions/modified items (such as a deck, and even electrical improvements) in a home to go unpermitted. This is usually because the home owner did it themselves, or hired a contractor who cut the corner of getting a permit. The permitting process certifies that repairs/renovations comply with local building and zoning codes. Making sure any addition or home expansion was permitted and passed final inspection gives peace of mind that the completed project meets local building health and safety standards.

Keeping home buyer beware in mind, due your due diligence. There are many other aspects of the home which can be verified, including (but not limited to) schools and zoning. If you’re buying a home to go to a specific public school, verify that the house is within the school’s boundaries and if there are plans to redistrict. If you plan to have an air-b&b in your home, make sure the house is appropriately zoned. You should also check zoning and the local planning office to make sure your potential building/addition plans are not restricted.

By Dan Krell
Copyright © 2019

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

July 22, 2016November 23, 2021

Real property disclosure

Finally, there is a new resource to get real property disclosure for home buyers. Home buyers can access property information that is not always readily available or hard to find. A July 19^th RealtyTrac (realtytrac.com) press release introduced Attom Data Solutions, their new parent company. The introduction described what the company offers to the real estate industry and consumers. Attom Data Solutions’ (attomdata.com) self-stated mission is: “to increase real estate transparency by arming businesses and consumers with the property and neighborhood data needed to make wise decisions.”

You may recognize RealtyTrac as being the go-to resource for foreclosed homes. But what you may not realize is, like other real estate websites it is an aggregator of information. RealtyTrac describes itself as “the leading provider of comprehensive housing data and analytics for the real estate and financial services industries…” by providing information on over 125 million properties.

So the idea of aggregating property information is not new. However, until now, there has not been this amount of information available for each property located in one place. The size and scope of Attom Data Solutions’ aggregated information is mindboggling. RealtyTrac’s press release revealed that the new parent company’s database of property information (called “ATTOM Data Warehouse”) holds more than 9 terabytes of information! (One terabyte is 1 trillion bytes). Putting the jargon into perspective, the data represents 99% of the U.S. population. And it features “enhanced and standardized data for more than 150 million U.S. property parcels.”

Before the ATTOM Data Warehouse, you would have to check a number of websites and make inquiries to several local agencies. The aggregated info includes: a property’s historical and current public records, ownership, mortgages, foreclosures, neighborhood information, demographics, environmental issues, natural hazard information, potential health hazards, and property features and neighborhood value information.

Besides being able to help you decide on which home to buy, Attom Data solutions’ reports may also help you decide on price. Additionally, home sellers may find the information useful as a form of disclosure, to answer many of the questions that are often difficult to find. Attom Data Solutions is reportedly offering data licensing to the industry, however the information is also available via their consumer websites RealtyTrac.com, Homefacts.com and HomeDisclosure.com.

The idea of consolidating property information into one location has been trending for several years. There have even been hints of creating a national MLS. Several years ago, the National Association of Realtors® created the Realtors Property Resource® (narrpr.com) to assist Realtors® in providing detailed reports to home buyers and sellers. Besides offering details on neighborhood comps, the generated reports incorporate data from various sources. Buyers and sellers are informed of analytics, trends and other factors. Of course, RPR is exclusive to Realtors®. But if you receive a report from your agent, they can help you with the analysis.

The amount of information about any given property seems to be ever increasing. However, an ongoing issue echoed among professionals and consumers is that the data is not always reliable. Even information that is pulled from public records are not always current. Verify the veracity included in any property report by cross checking several resources.

By Dan Krell
Copyright © 2016

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May 24, 2013June 30, 2019

New smoke detector technology in the home

Among some of the new disclosure requirements for home sellers here in Maryland include those regarding smoke detectors. Currently, home sellers are required to disclose whether or not smoke detectors “provide an alarm in the event of a power outage.” However, there are new disclosure and updating requirements.

Effective July 1^st, home sellers will be required to disclose to home buyers if installed smoke detectors exceed ten years of age, and if installed smoke have a sealed 10-year battery. Approved by the Governor on May 16^th, HB 1413/SB 969 was described by the Maryland Association of Realtors® Government Affairs Committee as having to provide such disclosure on an updated Maryland Property Condition Disclosure Form. The summary also describes requirements for home owners, whose systems malfunction when tested or who have smoke detectors and battery operated systems older than ten years of age, to update older smoke detectors to new sealed battery systems. Additionally, hardwired systems are required to be updated every ten years or at time of malfunction. Additionally, landlords of one and two unit dwellings are required to upgrade to the new sealed battery systems when there is a change of occupancy or if current smoke detectors malfunction; in the case of buildings that contain more than two units, the legislation states that responsibility falls on the occupants to test and notify the landlord to replace smoke detectors (mdrealtor.org).

Although smoke detectors have been around for some time now, the technology is changing and is the main focus of the Maryland Smoke Alarm Technology Task Force Final Report (available at the Montgomery County Fire and Rescue Service website; montgomerycountymd.gov). The Task Force was requested by the Maryland Fire Marshall to review smoke alarm data to determine strategies to reduce fire related deaths as well as identifying technology to improve smoke detectors.

One of the top recommendations made by the Task Force was to have battery operated smoke detectors “be the type that contains a long life sealed battery as its power source.” Other recommendations include: the requirement for all State jurisdiction to adopt the International Residential Code (IRC) requirement to update smoke detectors whenever applications for permits are submitted; the requirement of installation of smoke detectors in all bedrooms and every level of existing homes; and the requirement for home sellers to provide smoke detectors that meet the building code.

Even though the smoke detector has been a regular feature of the home for many years, most home owners don’t understand the technology. There are currently two fundamental types of smoke detectors, the ionization type and the photoelectric type: The ionization smoke detector contains a very small quantity of radioactive material inside a component known as a sensing chamber, and “provides a somewhat faster response to high-energy or open flaming fires, due to the fact that these types of fires generally produce smaller aerosols.” While photoelectric type “responds faster to the aerosols generated by low-energy or smoldering fires, since these types of fire tend to produce larger particles.” While many experts recommend that homes have both types of detectors, new technology smoke detectors will combine both types of detectors (from the Maryland Smoke Alarm Technology Task Force Final Report).

In addition to properly installed smoke detectors, experts recommend to plan and practice escape routes to reduce the time needed to escape a burning home.

By Dan Krell
Copyright © 2013

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

June 24, 2011July 27, 2019

As-is or as-is

For years, the idea of a simpler home sale was one attraction to selling a home “as is.” However, “as is” is not always what you think it implies. Local Realtor® contracts and associated addendums have several meanings for “as is.” If you’re already confused, don’t feel bad, many real estate agents are often confused too. An “as is” home sale is one of those situations that may merit an attorney consultation to help you understand your obligations as a home seller or home buyer.

Home sellers decide to sell their home in “as is” condition for various reasons, besides attempting to circumvent property condition clauses within the local Realtor® contracts of sale, which require electric, heating, air-conditioning, plumbing, and appliances be in working condition at time of sale. Some reasons a home owner may not want to guarantee the condition of their home may be that they are not entirely aware of the property’s condition, such as when owned for a very long time, or selling a rental property. Estate and trustee sales are often sold “as is” because the sellers also do not typically have knowledge of the home’s condition. And of course distressed properties (such as foreclosures and short sales) are mostly sold in “as is” condition.

Prior to the “as is” clause we have today, many agents and sellers often signed the Maryland Residential Property Disclaimer to convey the home is “as is” condition thinking that they were relieved of their obligations under property condition clauses within the contract of sale. However, savvy agents went further to strike various clauses from the contract of sale to further reinforce the seller’s “as is” claim.

The Maryland Residential Property Disclaimer currently indicates that the home conveys with all defects without making any representation of the condition and without warranties. However, the Disclaimer also states “except as otherwise provided in the real estate contract of sale,” which without further clarification can and has resulted in disagreement and confusion.

To further clarify the meaning of “as is,” the “as is” condition clause was introduced. The “as is” condition clause not only specifies that the seller makes no warranties or representations of the property condition or the systems and equipment in the home, but it also specifies which clauses are deleted from the contract of sale. The clause also indicates the time at which the home is conveyed “as is.” Lenders selling foreclosures require a specific “as is” clause to be signed by buyers.

Buying a home “as is” does not usually preclude you from conducting a home inspection. However, sellers often allow an inspection where the buyer can “walk away” in case they find the property condition unacceptable.

Additionally, “as is” sellers are not relieved from disclosing known latent defects, unless the sale is exempt from Maryland’s Single Family Residential Property Condition Disclosure Law (which defines latent defects as material defects or an improvement to real property that: “a buyer would not reasonably be expected to ascertain or observe by a careful visual inspection,” and “would pose a threat to the health or safety of the buyer or an occupant of the property, including a tenant or invitee of the buyer.”).

Are you still confused about “as is?” Always consult an attorney to interpret your contract and help you understand your contractual obligations.

By Dan Krell
Copyright © 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.