Listing Agreements: Filling Out the Property Condition Report

As you are filling out your Listing Agreement one of the Most Important pieces of the contract that you are going to fill out is the Property Condition Report.  Idaho Law 55-2501  requires sellers of residential properties to fill out a property disclosure.   There are a few instances when it is not required such as between spouses, if your deceased, or if the property is being sold by a bank or mortgage company and a few other specific conditions.  You can read that here.  But for the most part, for the average transaction and the average person, it is required by law.  And you will find this pretty universal across every state.

 

The Property Condition Report is your statement of the Condition of the Property.  It’s your Disclosure of the condition of the home.    To read all about the Laws for Property Condition Disclosure Act.

Things You will have to Disclose:

Some of the General Information your going to be wanting to provide is for instance if your a rural property have you been notified that your getting annexed into the city.  Or are you in an area of city impact.  Things that are going to affect the future of the lot use.  Zoning is another good example.

 

You are also going to disclose that everything that is included in the home is working or not working it all needs to be disclosed.

You’re also going to disclose all of the necessary information regarding the bones of the house.  Including anything that could damage the home:  an example being water intrusion.  House only floods in the spring there may be no sign of that in the fall when you are selling the home but when those buyers find out the house floods every spring that could be a big deal to them.  Hello Lawsuit!

You need to disclose all water damage

So you really want to be specific on any issues that you know about.  This is not one of those forms that you need to fix the things on there that you are disclosing.

 

It doesn’t matter that the house floods every spring it only matters that they buyer was told.  Buyer may have a solution for it or buyer may not care.  Either way, your butts covered because the buyer cannot come back and say you didn’t tell him.  He has to sign the disclosure form when he makes the offer so even if he did not read it you did tell him.  

 

Another big issue of disclosure is water, septic, sewer, electrical drainage, heating anything that can affect someone’s use of the property.

Some of those issues in our area could be the septic backs up, information about a well, We know it goes dry in the fall, flooding anything that you can think of that indicates something is not working as it should be.  For the basic questions, I am here to help.  For the not so basic questions, I am happy to refer you to some Real Estate Attorneys in the area that can help you.

 

There is also a section asking about issues clearing title.

This is a big one they ask for lot line disputes, encroachments, easements etc.

This is one of those that I think is extremely important to disclose as this is all going to come out during a title search so you may as well get this on the table pronto.  Why?  Because typically in Idaho you have an accepted contract prior to the title being pulled.  You certainly do not want your house tied up in a contract that is going to fail when the buyer finds out there are easements or lot line disputes etc that are not to there liking.  Every lost day could be the day that the right buyer was looking for your home.

 

Not sure what title is Read More Here.

 

I like to tell my clients to minimize all of the surprises that you can prior to an accepted contract.  We have enough reasons that are out of our control to make a contract fail there is no point in setting it up for failure from the start.

 

I like to have the property condition Report filled out prior to the actual listing contract being done.

Reason being is I like to drop this off at the pre-listing meeting so that you can take your time to answer it.  Also, our MLS requires a home to be posted within 24 hours so if you need extra time to fill this out it makes it uncomfortable and hurried for all especially if  You need time to  Gather up any supporting documents, receipts etc that support what you have to disclose.  A good example is:  say the upstairs bathtub leaked and it damaged the downstairs wall and ceiling.  You disclose that it leaked but you also disclose that you had the sheetrock replaced and the carpet or?  Basically, someone has been told there was water damage there it has been solved if it bothers you more –  than when you do a home inspection you may want to look there harder.  But you have notified them that it’s been damaged and repaired.

 

As you are filling out this form you want to make sure that you answer every single question.  Even if the answer is no the form needs every single line filled out.  And that takes time!  And probably a set of glasses:)

The other reason I like to have it filled out first is I put it on the MLS when I add the listing.  If you read a sales contract the buyer has to disclose when the offer is made if they have received the property condition report.

Why is that important to you?

If they have received the property condition report prior to making the offer they have had the opportunity to practice their due diligence and they know that when they are making an offer:   a good example is the property mentioned above that floods every spring.  If they didn’t find that acceptable they should not be making an offer.

Now if they did not have that information prior to making the offer than they have 3 days to look over the property condition report and use that as a reason to get out of the transaction.  Like I said minimize surprises and minimize the excuses to get out of the transaction.  

Doesn’t mean they can’t use something else to get out of the contract but it won’t be the Property Condition Report.  And most important in a sue happy culture your butt will be as covered as we can get it.

 

What happens if something Breaks or Changes during your Contract?

The short answer is we amend the Property Disclosure form immediately if the home is not under contract to sell.  If it is under contract to sell then we still disclose right away and then hopefully come up with a solution that suits all.   But we Alway Disclose!

 

Questions or Comments Please don’t hesitate to shoot me an email.

 

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