Disclosures: Soon as Practicable Before Transfer of Title? (You Bet!)



Things have been pretty quiet in the California disclosure world over the past year. In 2006, changes occurred for Megan’s Law, airport influence areas, supplemental taxes, and the methamphetamine lab disclosure. 2007 saw no significant changes and apparently 2008 will be pretty quiet as well.

One relatively minor change will likely come as a result of Senate Bill 127. This bill, authored by Senator Kuehl of Southern California, is related to how soon various disclosures are presented to the buyer after execution of contract. Current requirements state that the disclosures are to be presented “as soon as practicable before transfer of title”. The initial drafting of the bill stated that disclosures are to be made within three days of going into contract. After four amendments to the bill over the past three months, the span has been increased to 10 days. If the transaction involves a common interest development where additional disclosures such as homeowner association documents need to be assembled, the requirement is 20 days.

I doubt that these new proposed requirements will affect the typical Bay Area real estate agent. In the past, it was not uncommon to get a call from a panicky agent because someone forgot to order a Natural Hazard Disclosure report while they were at the escrow sign-off! Today that rarely happens. In most cases, the reports are ordered prior to the property being listed. Lining up all the HOA documents can be at times difficult and costly, so it is wise to expand that requirement to 20 days. The most recent amendment to SB 127 gives the parties in the transaction the option to increase the time the disclosures are provided if agreed upon in writing.

Ted Stephanos blueNHD