When I was still practicing law I made a very good living representing buyers and sellers in disputes arising out of mandatory disclosure documents which change hands during the purchase of residential real estate in California. In fact, in 2000, some estimates had 1 in 5 residential real estate transactions having some type of attorney involvement in order to navigate a dispute arising after the close of escrow. This incredibly high number of disputes was/is due to a number of things including, the willful withholding of material information by sellers, negligence by sellers in fulfilling their disclosure obligations and outright incompetence on behalf of the real estate agent.
Sellers in San Carlos are especially susceptible to falling victim to disclosure issues for a variety of reasons. Many homes in San Carlos have unpermitted work, are on hillsides, are close to schools and parks, have drainage issues, etc. Additionally, many sellers are receiving poor advice (or none at all) from their agents regarding disclosures. In just the past year I have had three buyers purchase property in San Carlos where we uncovered items prior to the close of escrow that should have been disclosed, but were not. In one of the cases we did a little bit of digging and found a blatant misrepresentation regarding unpermitted work. On the buy-side, if you and your agent are not on your toes you may be in for a big surprise down the road.
As I have mentioned a few times on the blog, most sellers and agents are so consumed with the highest and best price that they tend to ignore the second part of the transaction which is the diligence surrounding the disclosures and risk assessment. Of course I want to maximize the price for my sellers, but that same effort needs to be put toward making sure that once escrow closes, the transaction is truly a done-deal.
On the buy-side you and your agent need to read the disclosures carefully. Conduct your own investigations into the statements made by the sellers. If you feel that your agent is not being vigilant enough with regard to researching these issues you should contact their broker. You may also want to have an attorney immediately review the documentation. Paying an attorney $1,500 to review the documents on a $1,000,000 purchase is a worthwhile investment if your agent is not representing your interests adequately.
3 Comments
Bob – without going into details, could you describe what the outcome was in the case with unpermitted work? I have heard that in San Carlos it is possible to get an as-built permit for a prior owner’s unpermitted work, unlike in some other more stringent cities.
Hi Visitor to the Area,
Sure. In once instance we re-negotiated the deal. In the other two instances the City of San Carlos was extremely understanding and worked well with us to help correct the issue(s). The City seems to be very understanding of unsuspecting homeowners buying into unknown and unpermitted home additions and modifications.
I have heard mixed reviews on the San Carlos Building Department, but my experiences with them have been extremely positive and I was constantly under the impression that they were trying to do the right thing with regard to the new owner. With that being said, I have not heard of “as-built” permits, but, again, I thought they did everything possible to help the new owner permit the work with the least amount of hassle possible.
Thanks for the post.
Bob
Good article regarding disclosures. If I can add my opinion about the Natural Hazard Disclosure (NHD) report…buyers please read the reports! In many cases agents and buyers will gloss over the report, look at a series of “NO” boxes checkmarked on Page 1 and sign the report and file it away. Make sure to read over the entire report, most specifically local disclosures where fault zone, landslide, soil creep, liquefaction info will be disclosed by the better quality NHD companies out there. Fault zones in San Carlos? Yes, there are inactive fault traces mapped in the city which city planners could require significant geologic studies to be prepared prior to construction work. I have worked in the NHD field for over 16 years and have spoken with buyers who didn’t read their reports thoroughly or were under the impression that “all of California is in a fault zone” which is simply not the case.