One of the San Diego County Transaction Coordinators at Transaction 911 is currently helping her son to study for the California Real Estate Salesperson’s exam. Since it has been a long time since this Transaction Coordinator actually took the licensing exam, she says that it’s a great reminder of all of those things that we don’t think about too often. This Transaction Coordinator also states that there are lots of practice exam questions about disclosing material facts.
Here’s an example:
Broker Olson lists the property of Seller Farr. Seller Farr states that the property has been connected to the sewer, however Broker Olson has information that causes him to believe that the property has not been connected to the sewer. Broker Olson has a duty to:
- tell a buyer what he knows about the sewer.
- keep quiet.
- only disclose what he knows if the buyer asks.
- only disclose when he knows if the seller instructions him to do so.
What is a material fact?
A material fact is a fact that would be to a reasonable person germane to the decision to be made as distinguished from an insignificant, trivial or unimportant detail. In other words, it is a fact which expression (concealment) would reasonably result in a different decision. In a real estate transaction, both the seller and the seller’s agent are required to disclose all material facts that they know about the property. For the seller, this can be done on the Transfer Disclosure Statement (TDS), the Seller Property Questionnaire (SPQ), or the Supplemental Statutory Disclosure (SSD). For the agent, this can be done on the Agent’s Visual Inspection Disclosure (AVID) or on an Addendum.
No matter the form that is used to disclose materials facts, this is not an area to be ignored. To conveniently forget to tell a buyer that the property had mold remediation or was previously used as a methamphetamine lab will result in some pretty nasty legal battles. And, while watching lawyers on television or in the movies is entertaining, a real world law suit is probably not quite as much fun.
So, it’s always a good idea to remember to address all material facts when completing your real estate transaction paperwork. And, if you would like help to prepare your fully compliant real estate transaction file, please do not hesitate to contact the transaction coordinating team at Transaction 911.