The process of reviewing disclosure packets can be daunting, but it’s extremely important to review them in their entirety to determine whether a property is right for you.
We’ve put together an overview of the types of documents included to help you navigate.
Seller Disclosures and Required Disclosure Reports
Transfer Disclosure Statement (TDS)
is completed by the Sellers to disclose information and knowledge about the property.
Seller Property Questionnaire (SPQ)
is competed by the Sellers to disclose known facts about the property and provides additional details not covered in the Transfer Disclosure Statement. This will detail any issues they experienced during their ownership.
Residential Earthquake Hazards Report
is completed by the Sellers to disclose issues that could cause damage in the event of an earthquake, which includes foundation bolting, water heater strapping, and other seismic retrofitting.
Natural Hazards Disclosure (NHD)
discusses 1) Federal, state, and local city/county level natural hazards within a certain radius of the property. This can be things like high fire zones, potential of flooding, earthquake zones, etc. 2) property tax liabilities.
Preliminary Title Report
identifies the chain of ownership, as well as liens and encumbrances (that will be cleared before close of escrow) on a property. The report contains the conditions under which the title company will issue a particular type of title insurance policy.
Inspection Reports
*Not required of sellers. Home and pest inspections are the most common inspections included in disclosure packages. Buyers have the right to conduct their own inspections.
Home Inspections
give a detailed look into the property’s condition. The inspector will check electrical, plumbing, HVAC, appliances, foundation, and so on. The inspector makes notes and their current condition. They will typically point out items that should be addressed, but do not provide cost estimates for repairs.
Pest Inspections
check for wood destroying pests and organisms. This includes termites, fungus, leaks and moisture that can lead to the destruction of wood. Findings are separated into Section 1 and Section 2 items. Section 1 items state active infestations and infections that should be addressed immediately. Section 2 items are conditions that will likely lead to infestation or infection. Pest inspection companies are also licensed contractors and will provide cost estimates to remedy most issues.
Roof Inspections
check for leaks, proper flashing, as well as the condition of shingles and chimneys. Roof inspection companies are also licensed contractors and will provide cost estimates to remedy most issues. Some roof inspection companies may only do repairs and not roof replacements.
Foundation/Structural Inspections
check for foundational issues, such as distinct slopes, cracks above doorways, or doors out of alignment. Structural issues can lead to sagging roofs, angled floors, or cracks that leave your home vulnerable to pests and water damage.
Pool and Spa Inspections
include safety checks, such as proper latching/fencing and electrical wire/device placement. It also includes review of the vinyl liner and plaster, along with any decorative or functional tiling and components like the filter, pump, and heater.
Property Specific Disclosures
Homeowners Association (HOA) Docs
explain the Covenants, Conditions and Restrictions (CC&Rs). CC&Rs are legal documents that lay out the rules and guidelines for the community. The HOA docs also include (but are not limited to) HOA meeting minutes, bylaws, budgets, special assessments, and dues.
Point of Sale Ordinances
are mandated items that need to be compliant at the time of property transfer. This may pertain to the sewer lateral line that runs from the house to the street, sidewalk repair and/or other ordinances. Cities such as Oakland, Pinole and Castro Valley have such ordinances in place. Look out for compliance certificates or addendums in the disclosure packet that identify whether the property is in compliance or not. If not, the item is typically negotiable at the time of offer.