Tahoe Buyer Disclosures 101
Congratulations you’ve decided to buy, or sell a Tahoe home or condo. The sales process is more than fancy brochures, or looking at properties.
What happens when it comes time to make a offer, or when you get an acceptance will be governed by those contract terms, conditions and period of time to complete different tasks – your timeline will dicate what and when disclosures and investigations take place?
What happens during the contingency period, the times allocated to complete different tasks and investigations will be dicated by what you and your agent negotiated between you and the seller.
If you are thinking, we’ll work the specific terms out once we have an accepted offer, think again! If you wait to ask for specific investigations, or time periods to complete inspections, or document reviews, it will be too late.
In the greater North Lake Tahoe – Truckee area, the timeline and time periods to investigate and review disclosures, advisories, and other items are all established when you make an offer and during the purchase negotiation process.
Something as simple as access to the property is determined in your buyer offer, so the details matter at a time when a buyer, or seller may be soley focused on the sales price.
Once there is an accepted offer between the buyer and seller, the timeline begins the next day, day after acceptance. Even if the acceptance happends at 11:30 p.m. at night, day one of your timeline begins in 30 minutes, the next day, so being aware of your time is very important during the offer/negotiating process.
During the escrow process, Buyers will be informed of specialized conditions that affect the home, or can control the property (recorded rules, restrictions) a buyer may wish to purchase. Seller disclosures may include the following:
Sellers of properties built prior to 1978 have the following obligations to you:
- Give you a HUD pamphlet entitled “Protect Your Family From Lead in Your Home”
- Disclose all known lead-based paint and related hazards and provide you with any available reports
- Include a standardized warning as an attachment to the contract
- Complete and sign statements verifying that requirements have been met
- Retain the signed acknowledgement for 3 years
- In addition, sellers must give you a 10-day opportunity to test for lead
California law requires sellers to disclose to you, via a “Natural Hazard Disclosure Statement” or NHD,and if the property is located in one of six predetermined “natural hazard” zones. Typically the NHD report is prepared by a third party company and will cover the following:
The six zones are:
- A flood hazard zone as designated by the Federal Emergency Management Agency (FEMA)
- An area of potential flooding after a dam failure (also known as an inundation area)
- A very high fire hazard zone
- A wild-land fire area, also known as a state fire responsibility area
- An earthquake fault zone
- A seismic hazard zone
If an NHD is delivered to you after you signed the Purchase Agreement, you will have three days to rescind the agreement.
Note: Often third party NHD reports will not only cover the hazard zones, but will also provide other information on the property as well such as Mello-Roos information, Megan’s law, airport traffic flight patterns, location near industrial areas, methamphetamine reminder, along with other information that is unique to the region, or property location. Not all NHD reports are the same. If your Tahoe real estate agent has a preference, you’ll note it in your purchase offer.
Especially (but not exclusively) if you are buying a home in a newer area, you may be locating into a Mello-Roos tax district, and the seller must provide to you a “Notice of Special Tax” to let you know. If this notice is delivered to you in person, you have three days to rescind your offer. If it’s delivered via U.S. mail, you have five days to decide.
Basically, a “Mello-Roos Community Facilities District” is formed by a local government, district, or agency to finance public services and facilities including police and fire departments, ambulance and paramedic services, parks, schools, libraries, museums and cultural facilities.
Condominiums , or Planned Unit Development, or Property with a mandatory HOA group
If you’re buying a condominium, townhouse or other planned development (for purposes of this discussion, we will call them all “condominiums”), there are things you need to know about common areas (such as greenbelts and recreational rooms) and the homeowner’s association.
You will be required to make monthly, quarterly, or annual payments, known as regular assessments, to maintain common areas, as well as special assessments to replace a roof or repair the plumbing, as determined by the homeowner’s association (HOA.)
Condominiums also may have regulations regarding architectural requirements, limitations on pets, and age restrictions (i.e., senior housing). These must be formally disclosed to you during escrow. You may receive this information via the following documents, to the extent that they exist and are available:
- Declaration of Restrictions: Commonly known as “CC&Rs”, or Conditions, Covenants and Restrictions
- Articles of Incorporation or Articles of Association Bylaws
- All current financial information and related statements, including operating budget, estimated revenue and expenses, HOA reserves, estimated remaining life of major components (including roofs, plumbing etc.), and regular and special assessments
- A statement describing the HOA’s policies and practices in enforcing lien rights or other legal remedies for default in payment of its assessments
- A summary of the HOA’s property, general liability, and earthquake and flood insurance policies
- On existing HOA’s, a statement describing any restrictions on the basis of age, such as authorized senior citizen housing
Many smaller HOAs will not have all of these documents, but must provide what they do have. We recommend that you review these documents thoroughly, because they will affect you firsthand.
If a registered sex offender lives in the neighborhood in which you want to locate, you have the right to investigate – this is made possible due to a 1996 statute known as “Megan’s Law.” (Note that the seller does not have an obligation to provide this information to you.)
To investigate, you may:
- Log on to: http://caag.state.ca.us/megan/index.htm
- Call (900) 448-3000 to access the California Sex Offender Information Database. (There may be a charge to check names by telephone.)
- Call your local police department to locate a CD-ROM records viewing station.
In addition to the mandatory state disclosures that a seller is required to make to you, there will also be a number of local disclosures that are specific to the property location, or area.
In addition to these specific topic disclosures, Sellers will complete additional disclosure forms including the Transfer Disclosure Statement (TDS) and Seller Property Questionnaire (SPQ).
Insurance – Home or Condo: While this is not a specific Seller disclosure, Buyers need to understand that getting either property insurance for a single family home, or that the HOA (Home Owner Association) master policy, or individual interior condo policies may be expensive, or difficult to obtain.
While a property owner may start out with easy access, or relatively low insurance premiums, in the Tahoe area, cancellation, and the difficulity in finding new insurance may be a lot more expensive, or even not available should their original policy get cancelled.
Agents can not forecast what situation a potenital buyer may counter in their search for the appropriate insurance policy, or if the HOA master policy is cancelled and they are not able to obtain new coverage with the amount of money allocated in the budget for insurance, resulting in higher HOA monthly/quarterly assessments, and/or a special assessments.
Buyers are strongly advised to start investigating the cost and/or availablity of insurance as soon as they find a property they are interested in, so there are no suprises later in the purchase process.
These are just a few of the topics and disclosure forms that a Buyer will receive as part of the disclosure process.
Both Buyers and Sellers need help through the entire property sale/purchase process. If you are a second home Buyer, or Seller, call me and I can help prepare you for a successful transaction.
Need more help in trying to figure out your North Lake Tahoe-Truckee home/condo buying, or selling options?
Do you want more information on the different neighborhoods, HOA fees, home owner amenities, locations, and which ones will best meet your individual needs, or impact the sale of your property?
Call me at 530.414.1260 and I can help you find the right place to buy!
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All information is deemed reliable, but is subject to change, and/or correction without notice.
Buyers and Sellers should investigate and verify all information to their own satisfaction.
Tahoe Buyer Disclosures 101