Daunted by Disclosures?
Disclosure packages in San Francisco can run up to four inches thick–especially if the property is a condo in a large building. But buyers can cruise through them more quickly if they know how to prioritize.
I tell buyers reviewing their first disclosure package to go through everything carefully, including the boring parts. There is some boilerplate material that will always be in every well-crafted Disclosure Package. I call this stuff “bedtime reading material.”
The portions of the package unique to the property are the most important. If you’re looking at a multi-unit property, the leases and tenant questionnaires are the first thing to review. The number of tenants, their ages, and whether they are protected can all affect a building’s value.
Inspection reports, if they exist, take next priority. My practice is to comb through them and take notes on things that stand out. (I oddly like this part.) If I find a nasty pest report that calls out structural rot or a home inspection with an extensive laundry list of big ticket items, I can let my Buyers know right away and perhaps save us all a lot of time.
The next documents worthy of attention to are the Sellers Real Estate Transfer Disclosure Statement (RETDS) and San Francisco RETDS Supplement. These long questionnaires are the Seller’s opportunity to tell you everything you should know, from the yippy dog next door to seasonal seepage in the garage. (I tell my Sellers that these forms are their opportunity to not get sued after escrow, so they are quite thorough when completing them.)
When warranted, I also take a hard look at the geological reports. The 1989 earthquake felt like a near-death experience for me, so I’m sensitive about homes on downslopes or upslopes and want to make sure they are not in slide zones. If it’s important to the client, these reports can also tell me if the property is on landfill.
A Word About Condo Disclosures:
Condo disclosures should include a complete set of the CC&Rs, the Budget, the By-Laws and Meeting Minutes for the past 12 months. When sifting through these, I often enjoy the meeting minutes, which sometimes have juicy details like the neighbor who sunbathes nude on the roof deck, or the one who overwaters her plants and creates a sluice of water down the back stairs. I also check the CC&Rs for the pet policy and rental restrictions.