Agency Disclosure Statement
(C.A.R. Form AD1)
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Required
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A real estate agent must provide an agency disclosure
statement for a transaction involving one-to-four
residential units, except certain subdivision sales (Cal.
Civ. Code § 2079.14). There is no exemption for an REO
sale. However, if the seller or buyer refuses to sign an
acknowledgement of receipt, the agent shall set forth,
sign, and date a written declaration of the facts of the
refusal (Cal. Civ. Code § 2079.15).
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Agent's Duty to Visually Inspect
and Disclose
(C.A.R. Form AVID1)
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Required
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For residential property with one-to-four units
(except for certain subdivisions), a real estate
agent is required to conduct a reasonably competent and
diligent visual inspection and to disclose to the buyer all
facts materially affecting the value or desirability of the
property that an investigation would reveal (Cal. Civ. Code
§ 2079). There is no exemption from this requirement for
REO sales. C.A.R. Form AVID is not a legally-mandated form,
but an agent is strongly advised to use the form to
document that he or she has performed the
legally required visual inspection.
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Airport in Vicinity
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Not Required
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An REO lender is exempt from the requirement of providing an
NHD Statement (Cal. Civ. Code § 1103.1(a)(2)), but is not
exempt from other provisions of California law requiring a
seller to disclose that a property is located in any of six
natural hazard zones. It is therefore highly advisable for an
REO lender to obtain an NHD Statement from a third-party
disclosure reporting company. The NHD expert is required
to include the fact that the property is "within an
airport influence area" (Cal. Civ. Code
§ 1103.4(c)(1)). Although the REO lender
is exempt from this disclosure requirement, the
lender must nevertheless disclose any known material facts
that may affect the value or desirability of the property (see
Material Facts below).
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C.A.R.'s Combined Hazards Book
(3-part booklet)
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Part 1: Recommended
Part 2: Required
Part 3: Recommended
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REO lenders and agents are strongly encouraged to provide
C.A.R.'s 3-part Combined Hazards booklet to prospective
buyers.
.
Part 1 is the Residential Environmental Hazards
booklet, which is not required for any transaction.
However, the law expressly shields a seller and agent
from liability by deeming delivery of the booklet as
adequate in informing the buyer about common
environmental hazards (Cal. Civ. Code
§ 2079.7(a)).
.
Part 2 is "Protect Your Family From Lead in Your Home,"
and required for most residential properties built
before 1978 (see Lead-Based Paint Hazards below),
including REO sales.
.
Part 3 is the Homeowner's Guide to Earthquake Safety
(and the Residential Earthquake Hazards Report).
Although an REO sale is exempt from this disclosure
requirement, delivery is highly advisable as the law
deems it as adequate in informing the buyer about
geologic and seismic hazards in general (Cal. Civ. Code
§ 2079.8(a)).
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Condominium or Other Common Interest
Development Documents
(C.A.R. Form HOA1)
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Required
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The seller of a condominium or other separate interest in a
common interest development must provide the governing
documents and other items to a prospective buyer (Cal. Civ.
Code § 1368(a)). There is no exemption from this
requirement for an REO sale. The seller may use C.A.R. Form
HOA to request a Homeowners' Association to provide these
condominium documents.
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Farm or Ranch Proximity
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Not Required
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An REO lender is exempt from the requirement of providing an
NHD Statement (Cal. Civ. Code § 1103.1(a)(2)), but is not
exempt from other provisions of California law requiring a
seller to disclose that a property is located in any of six
natural hazard zones. It is therefore highly advisable for an
REO lender to obtain an NHD Statement from a third-party
disclosure reporting company. The NHD expert is required
to include the fact that the property is located within
one mile of a farm or ranch as designated on a GIS
map (Cal. Civ. Code
§ 1103.4(c)(3)). Although the REO lender
is exempt from this disclosure requirement, the
lender must nevertheless disclose any known material facts
that may affect the value or desirability of the property (see
Material Facts below).
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Flood Insurance for Disaster Relief
Assistance
(C.A.R. Form SPQ or SSD1)
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Required
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If federal disaster relief assistance conditioned upon
obtaining flood insurance has been provided for a property,
the transferor must disclose the requirement of obtaining
flood insurance to the buyer in writing (42 U.S.C.
§ 5154a). There is no exemption from this requirement
for an REO sale. C.A.R. Form SPQ or SSD may be used to
disclose any disaster relief assistance.
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Industrial Use Zoning
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Not Required
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A residential seller must generally disclose any actual
knowledge that a property is affected by or zoned to allow
commercial, manufacturing, or airport use (Cal. Civ. Code
§ 1102.17). An REO lender is exempt from this
disclosure requirement, but must nevertheless disclose any
known material facts that may affect the value or
desirability of the property (see Material Facts below).
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Lead-Based Paint Hazards
Disclosure
(C.A.R. Forms RPA-CA, FLD1, and
C.A.R.'s Combined Hazards Book)
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Required
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Under federal law, a seller of residential property built
before 1978 must generally disclose lead-based paint
hazards. An REO lender is not exempt from this law, which
requires:
(1) Providing the buyer with an EPA-approved lead
hazard pamphlet (such as "Protect Your Family From Lead in
Your Home" in Part 2 of C.A.R.'s Combined Hazards Book);
(2) Providing the buyer with a 10-day opportunity to
inspect for lead-based paint hazards, unless otherwise
agreed in writing (e.g., C.A.R. Form RPA-CA paragraph
14B(1));
(3) Providing the buyer with a lead-based paint disclosure
statement (e.g., C.A.R. Form FLD); and
(4) Disclosing any known lead-based paint or lead-based
paint hazard in the property (e.g., C.A.R. Form FLD) (42
U.S.C. 4852d and 40 C.F.R. § 745.107).
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Material Facts
(C.A.R. Form SPQ or SSD1)
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Required
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A seller is required to disclose any known material facts
affecting the value or desirability of the property.
Whether something is material or immaterial will ultimately
be decided, if necessary, through the legal process by a
judge, jury, or arbitrator, based on the facts and
circumstances of the case. There is no exemption from this
disclosure requirement for an REO sale. C.A.R. Form SPQ (or
SSD) is not legally mandated, but an REO lender is
strongly advised to complete the SPQ or SSD, which works
like as a checklist, to help satisfy its duty to disclose
material facts.
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Megan's Law Disclosure
(C.A.R. Form RPA-CA,
paragraph 5C)
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Required
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A residential seller must generally disclose the
availability of a database of registered sex offenders in
at least 8-point type font (Cal. Civ. Code
§ 2079.10a). There is no exemption from this
requirement for an REO sale. If an REO lender drafts its
own sales contract, rather than use C.A.R. Form RPA-CA, the
Megan's Law disclosure is still required.
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Mello-Roos Tax and 1915 Bond Act Assessment
Notice
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Not Required
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A residential seller must generally make a good faith
effort to obtain a notice of a Mello-Roos special tax or a
1915 Bond Act assessment. An REO lender is exempt from this
requirement (Cal. Civ. Code § 1102.6b), but must
nevertheless disclose any known material facts that may
affect the value or desirability of the property (see
Material Facts above).
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Meth Lab Clean-Up
Order
(C.A.R. Form SPQ or SSD or
MCN1)
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Required
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A seller must disclose in writing to a buyer a pending
order issued by a local health officer prohibiting the use
or occupancy of a property contaminated by meth lab
activity. The seller must also give a copy of the
pending order to the buyer to acknowledge receipt in
writing. (Cal. Health & Safety Code § 25400.28.)
There is no exemption from this requirement for an REO
sale.
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Military Ordnance Location
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Not Required
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A residential seller must generally disclose any actual
knowledge of a military ordnance location within one mile
(Cal. Civ. Code § 1102.15). An REO lender is exempt
from this requirement, but must nevertheless disclose any
known material facts that may affect the value or
desirability of the property (see Material Facts above).
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Natural Hazard Disclosure
Statement
(C.A.R. Form NHD1)
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Recommended
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An REO lender is exempt from the requirement of providing
an NHD Statement (Cal. Civ. Code § 1103.1(a)(2)), but
is not exempt from other provisions of California law
requiring a seller to disclose that a property is located
in any of six natural hazard zones. It is therefore highly
advisable for an REO lender to obtain an NHD Statement from
a third-party disclosure reporting company or to complete
C.A.R. Form NHD.
.
Special Flood Hazard Area (Cal. Gov't Code
§ 8589.3).
.
Area of Potential Flooding (Cal. Gov't Code
§ 8589.4).
.
Very High Fire Hazard Severity Zone (Cal. Gov't Code
§ 51183.5).
.
State Fire Responsibility Area (Cal. Pub. Res. Code
§ 4136).
.
Earthquake Fault Zone (Cal. Pub. Res. Code
§ 2621.9).
.
Seismic Hazard Zone (Cal. Pub. Res. Code § 2694).
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Private Transfer Fee Notice
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Not Required
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A residential seller must generally provide a Notice of
Transfer Fee to a buyer (Cal. Civ. Code § 1102.6e). An
REO lender is exempt from this requirement, but must
nevertheless disclose any known material facts that may
affect the value or desirability of the property (see
Material Facts above).
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REO Advisory
(C.A.R. Form REO1)
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Recommended
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C.A.R. Form REO is a supplement to the C.A.R. purchase
agreements that addresses issues pertaining to REO
transactions, such as the disclosure requirements. It also
informs the seller and buyer that brokers cannot give legal
advice on lender-prepared agreements and other documents.
Form REO is not legally required, but it is highly
recommended for an REO sales transaction.
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REO Advisory (Listing)
(C.A.R. Form REOL1)
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Recommended
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C.A.R. Form REOL is a supplement to the C.A.R. listing
agreements that addresses issues pertaining to REO
listings, such as the disclosure requirements. Form REOL is
not legally required, but it is highly recommended when
taking a listing for an REO property.
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Seller's Affidavit of Nonforeign Status
(under FIRPTA) and California Withholding
Exemption
(C.A.R. Form AS1)
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Recommended or Tax Withholding May Be Required
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Under federal FIRPTA law, a buyer must withhold 10 percent
of the sales price from the seller's proceeds, and send
that amount to the IRS, unless an exemption applies. An
exemption is available if, for example, an REO lender
provides a written certification it is a nonforeign
corporation (26 U.S.C. § 1445). Similarly, under state
law, a buyer must withhold 3 1/3 percent of the sales
price, and send that amount to the FTB, unless an exemption
applies. An exemption is available if, for example, an REO
lender provides written certification that it is a
corporation qualified through the California Secretary of
State or has a permanent place of business in California
(Cal. Rev. & Tax Code § 18662(e)(3)(D)(v)).
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Smoke Detectors
(C.A.R. Form SDS or WHSD1)
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Required
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The seller of a single-family dwelling must deliver to the
buyer a written statement of compliance with the smoke
detector law (Cal. Health & Safety Code
§ 13113.8(b)). There is no exemption from this
requirement for an REO sale.
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Statewide Buyer and Seller
Advisory
(C.A.R. Form SBSA1)
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Recommended
|
C.A.R. Form SBSA advises both the seller and buyer of
various factors that may affect a sales transaction. Form
SBSA is not legally required, but it is a highly
recommended form to use in any real estate transaction,
including an REO sale.
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Supplemental Property Tax
Notice
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Not Required
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A residential seller must generally deliver a Notice of
Supplemental Property Tax Bill to a buyer (Cal. Civ. Code
§ 1102.6c). An REO lender is exempt from this
requirement, but must nevertheless disclose any known
material facts that may affect the value or desirability of
the property (see Material Facts above).
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Title Insurance Notice
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Required
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If title insurance will not be issued to the buyer of an
owner-occupied residential property with one-to-four units,
a notice of the advisability of title insurance must be
provided in a separate document to the buyer (Cal. Civ.
Code § 1057.6). There is no exemption from this
requirement for an REO sale.
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Transfer Disclosure Statement
(TDS)
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Not Required
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A residential seller must generally provide a TDS to the buyer
disclosing the features and condition of a property (Cal. Civ.
Code § 1102). An REO lender is exempt from this
requirement, but must nevertheless disclose any known material
facts that may affect the value or desirability of the property
(see Material Facts above).
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Water Conserving
Fixtures (SB 407)
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Required (but see effective dates)
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Applies only to real property built on or before 1-1-94.
Effective date for single-family residential real property
is 1-1-17. Effective date for
two or more unit resid. real prop. and commercial real
prop. is 1-1-14 (compliance
for some) and 1-1-19
(compliance for all and disclosure). (Cal. Civ. Code
§§ 1101.1 through 1101.7 and 1101.155.) There is no
exemption from this requirement for REO sales.
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Water Heater Bracing
(C.A.R. Form WHSD)
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Required
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The seller of any real property containing a water heater must
certify in writing to the buyer that the existing residential
water heater is properly braced, anchored, or strapped (Cal.
Heath & Safety Code § 19211). There is no exemption from
this requirement for REO sale |