As an executor, administrator, or trustee (personal representative or PR) responsible for a probate or a trust administration, being aware of estate property seller disclosures that protect the estate is critical. The various disclosures will need to be completed by the PR of a loved one’s estate and accuracy is of the upmost importance.
Traditional California disclosures include the CAR Transfer Disclosure Statement (TDS). This is the document that simply stated give the seller an opportunity to disclose information about the property that is important for the potential buyer to know. The seller of the property is required to provide this document within the time allotted on the CAR Residential Purchase Agreement. The TDS is a form required by California law in most residential real estate transaction pursuant to California Civil Code 1102.
Who is exempt from transfer disclosure statement?
Before you start the process of disclosing all material facts relating to the desirability and value of the estate property, when representing an estate and if you have not lived in the home, you are exempt from the TDS. The CAR Exempt Seller Disclosure (ESD) is a shortened disclosure to disclose any know facts about the subject property. The key here is the form specifically has written “Are you (seller) aware of any of the following”, you will then check yes or no. If any of your answers are “yes”, then you will complete the area under Explanation.
What should be disclosed?
Sellers must disclose anything that they are aware of including a broad range defect, such as a leaky roof, deaths that occurred within the last three years on the property, or neighborhood nuisances.
The obligation to disclose a death on the property
Regarding the very important CAR form ESD, the seller is obligated to disclose a death on the property within three years. When completing the document consider:
Are you aware of within the last three years, the death of an occupant of the property upon the property? If the answer is “yes”, you (seller) must answer truthfully and disclose both the occurrence and the manner of the death.
The three elements to consider are:
- Decedent was an occupant of the home
- Death occurred within the past three years
- Decedent died on the property
For example: when answering “yes”, the seller might write “my father passed away in the master bedroom of natural causes”. Passing away by natural causes is a most common occurrence. You can feel comfortable disclosing this information because experience shows most buyers have little concern about a death on the property, especially when it is natural causes.
And, if the death occurred more than three years ago?
If the death occurred more than three years ago, or passed away in another location, not on the property, then generally the death may not need to be disclosed. If the death was particularly notorious and/or has stigmatized the property, it may be a material fact that affects the desirability and value of the home. Keep in mind, if everyone in the neighborhood knows, it may be best to disclose the manner of the death on the property.
Exceptions to disclosing a death
There is an exception to disclosing a death on the property. If the death was related to HIV/AIDS, the seller and listing agent must decline to answer, even if asked. The reason for this exception is to avoid fair housing violations by the seller and the listing agent.
Delivering the disclosure statements to a buyer
In most cases, the disclosure documentation is delivered to a buyer once a purchase agreement has been negotiated. I prefer to have all the disclosures, including homeowner association documents completed prior to putting the home on the market. That way we avoid delays, and everything is ready to quickly be delivered to the buyer’s agent who will then present the disclosures to their buyer. The buyer will review, sign/initial and date the documents, and we will be sure that all the documents are returned to my team. That closes the circle of protecting you and the estate.
We don’t know what we don’t know
There’s a saying “we don’t know what we don’t know”, and I’ve found that to be true. I imagine you, like many PR’s want to feel comfortable throughout the preparation, marketing, and successful sale of your loved one’s home. This is one of the many important reasons to have an experienced guide by your side, to lead, guide and protect you and the estate. As your real estate advisor, you can count on me to help you accurately complete all the important disclosure documents.