Q & A with MCAR Attorney Paul Gullion
By Paul D. Gullion, Attorney at Law
QUESTION: I am selling my house, and it needs lots of repairs that I don’t want to pay for. So I am just going to sell my house “as-is” and not tell the buyer? That’s OK, right?
ANSWER: No, and I would like to explain why (remember, you are talking to a lawyer and we simply cannot say yes or no).
QUESTION: I knew this wouldn’t be simple, but tell me why?
ANSWER: Saying that you are selling your house in its “as-is” condition DOES NOT RELIEVE YOU OF YOUR OBLIGATION TO MAKE ALL LEGALLY REQUIRED DISCLOSURES ABOUT YOUR HOUSE TO POTENTIAL BUYERS. You still have to comply with these legal requirements whether you use the phrase “as-is” or not.
QUESTION: OK, so what are these disclosures?
ANSWER: There are two general disclosures, and a variety of specific disclosures. Let us focus on the general ones first. When you sell your house, you are required in almost all instances to complete a Transfer Disclosure Statement. This document requires you to disclose all you know about your house, and if you don’t fill it out completely and honestly you can get into trouble (in other words a lawsuit). The other general disclosure is mandated by Court cases, and it requires that you disclose all facts that would have a material influence on someone’s desire to buy your property, or an impact on the value of your house.
QUESTION: But if I tell buyers about my house, they may not want to buy it?
ANSWER: Remember something I learned a long time ago: everything about a house will eventually be known by the buyer, and it is better that the buyer knows before escrow closes than afterwards. If the buyer finds out the true condition of the house after escrow closes you could be sued, and pay lots of money to an attorney to defend you.
QUESTION: You mentioned specific disclosures. What are those?
ANSWER: California has laws that require the disclosure of such things as natural hazard zones, the existence of lead based paint and smoke detectors, water heating bracing, the availability of the Megan’s Law database, earthquake issues, the proximity of the house to military ordinance and industrial zoning. The list goes on. If your house is in a homeowners’ association, additional disclosures must be made.
QUESTION: Well, now that you have taken all of the fun out of selling my house, how do I go about making sure I have made all disclosures?
ANSWER: The best way to make sure that you comply with the disclosure requirements in California (and to make sure your sale goes as smoothly as possible) is to use a qualified real estate agent who can guide you through this and the other issues that arise in a real estate transaction.
QUESTION: Well does “as-is” mean anything in California?
ANSWER: “As-is” does still have legal meaning in a California real estate transaction. In California today, “as-is” means this: I will sell my house in its “as-is” condition after I have made all required disclosures, and by selling it “as-is” I am saying that I am not going to pay for any repairs to the house.
QUESTION: So I am telling the buyer: “Here is my house, here are my disclosures, and if anything needs repair you, the buyer, pay for it.”
ANSWER: Right, it becomes at that point a matter of negotiation with the buyer. Usually what happens is that the buyer will come back with a counter offer asking you to pay for some items. You are free to say no and move on, or to negotiate with the buyer so that you can sell your house.
In my next article, I want to talk about how these rules come into play when a lender sells a house it got through a foreclosure.
THE INFORMATION PRESENTED IN THIS ARTICLE IS BELIEVED TO BE ACCURATE AS OF THE DATE OF PUBLICATION. IT IS INTENDED TO PROVIDE GENERAL ANSWERS TO QUESTIONS, AND IS NOT INTENDED AS A SUBSTITUTE FOR INDIVIDUAL LEGAL ADVICE. ADVICE IN SPECIFIC SITUATIONS MAY DIFFER DEPENDING UPON A WIDE VARIETY OF FACTORS. THEREFORE, IF YOU HAVE SPECIFIC LEGAL QUESTIONS YOU SHOULD SEEK THE ADVICE OF AN ATTORNEY OF YOUR CHOICE.
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