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Friday, June 13, 2014

Full disclosure is Real Estate’s “lemon law”

Ask almost anyone how they feel about the “lemon law” in auto sales and you’re bound to hear a resounding huzzah.  To refresh your memory, this is legislation that enables a car buyer to return a less-then-satisfactory auto within a reasonable time frame and get a full refund.
There’s a kind of lemon law in Real Estate, however, that doesn’t always have such an easy fix.  It’s known as full disclosure.  “The state of California extends very strong legal protection for buyers,” said Nikki.  “An alert agent is smart to counsel sellers to list anything and everything that might affect the value of a property in a negative way.”  Sometimes this is a wrench for the seller.  Who wants to disparage a house that’s about to go on the market?

But if full disclosure seems a boon to buyers (and it is), it’s equally so for sellers.  Much as it hurts to recite plumbing problems, leaky windows, even upgrades done without a permit, such candid admissions give prospective buyers a chance to decide if they want to take on these problems-- and often they do.

The real snag arises if the buyer resells the property without fixing the problem and then fails to disclose it.  The original owner is off the hook, but the second seller may be in for trouble.  “In the worst case,” said Nikki, “the new buyer may be very angry.  But usually the buyer’s and seller’s agents can get together and work out a solution.”

Non-disclosing sellers often deserve some sympathy.  Sometimes they don’t know the problem exists, or don’t recognize it as a hazard.  The annals of buyer discontent contain some surprising protests.

·        The shower stall was not fitted with tempered glass

·         The owner’s mother had died in the home less than three years ago

·         A rattlesnake had been spotted in the back yard

·         A neighbor was accustomed to burning his own garbage

·         The dog down the street was a nonstop barker

·         Previous owners had kept indoor cats

In older neighborhoods, new owners may discover that unpermitted upgrades were performed so long ago that local ordinances didn’t apply.  As the saying goes, these changes were “grandfathered” in.  However, if they haven’t caused trouble in all these years, they’re unlikely to be a problem now, and can usually be brought up to code or “retro-permitted.” 

“Happily, there’s a limit to how far back these protests can reach,” said Nikki.  “The house you sold 10 years ago can’t come back to bite you.”


We welcome your comments and queries.  Reach us at HolmesTeam@goldrushgroup.net

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