During the escrow process, you MUST inform the buyer of conditions that affect your home. These may include the following conditions:
Lead Paint
Sellers of properties built prior to 1978 have the following obligations:
- Provide buyers with a HUD pamphlet entitled “Protect Your Family From Lead in Your Home”
- Disclose all known lead-based paint and related hazards and provide 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, you must provide the buyers with an opportunity to test for lead
Natural Hazards
California law requires sellers to disclose, via a “Natural Hazard Disclosure Statement” or NHD, if properties are located in one of six predetermined “natural hazard” zones. There are companies that will prepare the NHD for you. 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
Mello-Roos Districts
Especially (but not exclusively) if you are selling a home in a newer area, you may be within a Mello-Roos tax district, and you must provide to the buyer a “Notice of Special Tax.” 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, etc.
If you are selling a condominium, townhouse or other planned development (for purposes of this discussion, we will call them all “condominiums”), there are the buyer needs to know about common areas (such as greenbelts and recreational rooms) and the homeowner’s association. The buyer will be required to make monthly 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 the buyer during escrow. Many smaller HOAs will not have all of these documents, but must provide what they do have. You may provide 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
Other Mandatory Disclosures
There are many other mandatory disclosures you must complete truthfully and correctly to the best of your knowledge. These disclosures are constantly being updated by the California Association of Realtors. Your Realtor will have the most up-to-date forms and will let you know which ones are required for the sale of your home.
