Review of the Statewide Buyer and Seller Advisory

Used with Santa Barbara Real Estate and Montecito Real Estate

The Statewide Buyer and Seller Advisory is another important document that outlines and defines what each of these parties can expect in a transaction of Santa Barbara property and what their mutual and exclusive obligations are.  Sellers of Santa Barbara homes and Montecito homes will encounter this document at the time of listing their property with a real estate broker, buyers will review this document either at the time of making an offer or after an offer has been accepted and the 'Advisory' is added to the transaction file. 

It is relevant that both buyers and sellers read through and understand the matters discussed in the 'Advisory' as it discloses issues that should be considered and defines the expectations of the parties involved in the transaction.  Real estate brokers are not qualified as inspection experts and while they may offer an opinion, buyers and sellers should only rely on licensed professionals capable of analyzing a specific situation at hand.

Buyers are advised that neither sellers nor brokers guarantee the physical condition of a property and that buyers should rely on their own investigations employing appropriate professionals when necessary.  A buyer is entitled to receive copies of any previously existing reports on the subject property when available.  The purchase agreement will outline specific timelines for undertaking inspections and reviewing disclosure reports, it´s prudent to address issues that may come up during those time periods.

Sellers have a duty and are expected to disclose material facts about their property which may impact desirability or value.  Sellers also have an obligation to make their property available to the buyer and the buyer´s agents for the purpose of investigations and inspections.

It is disclosed to buyers and sellers that real estate brokers are not experts in the area of property inspections and while brokers are required to make a visual inspection of accessible areas of a property, buyers and sellers should rely upon the findings of licensed professionals whom they have engaged for that purpose.

1). Buyers will typically hire a building contractor or a professional inspection service to inspect the physical structures on a property.  This type of inspection is often generic in its approach and report but may often indicate the need to follow up with another professional with a background more specific to the situation.  Such specific inspections may include septic systems, swimming pools, structural elements, internal systems in the home, environmental testing, pest infestation and geological conditions as examples.  Buyers understand that brokers are not experts in these areas and may recommend professionals for various inspections, the buyer has no obligation to use these candidates and may choose their own contractors; buyers also have the right to wave any inspections though not advised to do so by brokers.

2). The only reliable sources for the square footages of structures are licensed appraisers and for property lines and parcel areas a surveyor should be consulted.

3). Most people are generally aware that California is susceptible to active soil movement.  It may be appropriate to hire a geologist or soils engineer for concerns about drainage, soil stability or conditions that may be impacting the structures on a parcel.

4). Earthquakes represent another geological challenge, again buyers and sellers are advised to consult with qualified professionals for information on seismic activity or the affects of such on the structural aspects of the improvements.

5). Environmental hazards can exist from natural conditions or by human intervention, such as power lines, fuel storage or improper waste disposal.  Buyers and sellers should contact specific inspectors to address their concerns.

6). Mold has become an environmental concern.  Typically mold exists because of the presence of moisture, past or present in a structure.  Conditions may not be easily discernable and inspections for such should be conducted by trained professionals.

7). Water intrusion of a home may come from improper or inadequate drainage, leaking pipes or underground sources.  Damage can be extensive and costly to repair, it buyers or sellers have any concerns at all it is strongly recommended to engage a professional contractor for advise.

8). Septic systems are usually out of sight and thus out of mind.  When a property transfers it is recommended that the septic tank be pumped and inspected by a sanitation professional.  It may be advisable to inspect other parts of the system as well.

9). If a property is served by a private water source or well, it is advised that buyers and sellers review recent water quality test results and understand the capacity of the service and delivery system.  Engaging a testing company and a well and pump company may be appropriate.

10). It is not uncommon for a structure to be affected by pest infestation.  It is recommended to hire a licensed pest company to inspect for any problems and provide remedial options.  Completing this work prior to the close of escrow may be required by a lender should a mortgage be placed on the property.

11). Prior to the transfer of a property the title company should provide the parties with a title report.  Typically, this report will identify any easements or encroachments on a property.  If there are any existing conditions that may suggest concerns in these areas, it would be best to consult the appropriate professionals for insight and definition.

12). The natural hazards report should provide the buyer and seller with information regarding earthquake fault zones and seismic hazard zones; for additional insight and concerns a professional geologist should be consulted.

13). In southern California, fire is always a concern.  Definitions about fire designated areas will be found in the natural hazards report and would also be available through insurance companies.  Another source for information about site maintenance would be the local fire company.

14). Areas prone to flooding may be a concern is a property is near a drainage area or water source.  The natural hazards report will contain flood zone information and consulting with local government agencies is helpful.

15). When a property transfers it is usually expected that all of the necessary permits have been obtained and that the property is incompliance with the zoning ordinances.  To be certain it is advisable to check with the local government agencies if there are any doubts.

16). Every property has a view.  Over time this may change as foliage grows or neighboring properties are developed, there may also be CC&R´s that regulate the maintenance of a view shed area.

17). Future repairs or remodels to a property may enact requirements to comply with other laws and regulations.  Buyers and sellers should check with a licensed contractor or the related government agency for specific information.

18). This should be obvious, but be advised that if a property is on or near a golf course, golf balls may land on your property and cause damage or injury.

19). Schools serving the subject property need to be verified with the school district.

20). Noise may affect a property, sources and tolerances should be researched.

21). The subject property may have been inhabited by pets or animals whose eliminations and pest infestations may remain.

22). Local laws may require that safety measures be taken for the protection from unsupervised access to pools, spas or other property features.

23). Local laws may require the property be retrofit with safety devices such as smoke detectors, water heater bracing low flow water controls, gas shut offs and tempered glass.

24). The property may be located in an area of water shortages and conservation; buyers and sellers should check with local government sources for services, restrictions and rates for usage.

25). Neighborhood and area conditions may affect the subject property.  It is advised to make an inspection of the area and or check with local government sources for conditions or activities that exist in a particular area.

26). Obtaining insurance for a property should be pursued during the contingency period.  Challenges may exist due to previous claims on the property or a change in conditions.

27). Properties located in areas susceptible to natural challenges such as hillsides, brush areas or oceanfront may have to seek insurance available from the California Fair Plan and coverage may be limited.

28). If a property is located in an area of special designation such as an architectural review process, a historic designation, preservation of open space or in a coastal area there may be additional regulations that govern the development or modification of the property.

29). Properties may be located in an area where an improvement bond has been assessed against the property for community improvements.  Sellers are expected to disclose such taxes should they exist.

30). Properties existing in locations that are governed by home owners associations will have restrictions and rules that homeowners are expected to follow.  These guidelines can be found in the declaration of the covenants, conditions and restrictions and other governing documents.  Monthly dues are typically assessed and may cover the maintenance and insurance of common areas.  The seller is required to provide the buyer with copies of the homeowner´s association documents and CC & R´s.  The buyer should familiarize themselves with any restrictions, assessments, financial solvency of the association and any legal action that may be taken or is pending.

31). Properties may have additional fees that are activated upon a transfer of a property such as enhancement fees, transfer fees or association fees in addition to the ones mentioned in the previous paragraph.

32). On occasion some properties may have been constructed with materials or have appliances installed that have been found to be defective.  Some materials and products are identified as well as sources of additional information but this may not be a complete list.  Concerned buyers should independently investigate any situation.

33). Should a property be rented there may be government restrictions.  Buyers should contact local governing agencies for information should they wish to use the property as a rental.

34). Properties built on leased land have limitations, title insurance may not be available and property rights are not secured.

35). Home warrantees are available prior to and after property transfers, coverage may vary and may not be all inclusive.

36). In the present era the marketing of properties includes exposure on the Internet.  Brokers have no control over who views this information or the duration for which it is available.

37). Escrow funds are not disbursed until there are sufficient 'good funds' to cover the disbursement; check with your escrow company for their definition and handling of 'good funds'.

38). A supplemental tax bill may by issued when a property transfers; this will reflect the assessor´s recognition of the change in value of the property.

39). Unless all parties involved with a transaction have signed a confidentiality agreement, it should be considered that the information contained in an offer may be disclosed to other parties.  

40). If the seller of a property is a non-resident alien a buyer may be required to withhold and remit a portion of the purchase funds to the IRS and the California Tax Board. Sellers should provide buyers with a statement of non-foreign status.  Modifying conditions may exist; buyers and seller should consult their attorneys or tax consultants. 

41). Buyer and seller may agree to sign a liquidated damages clause should the buyer breach the agreement.  The amount awarded for damages is limited and an escrow company will not release any funds without a judge´s or arbitrator´s decision and instructions.  Buyers and sellers should seek legal advice regarding this issue.

42). Should a dispute arise during the transaction, mediation may be an alternative for resolving conflicts. 

43). Arbitration is a more formal process of dispute resolution.  It is usually more expeditious that formal court proceedings and the parties give up their right to a jury trial and appeal.  Buyers and sellers should seek their own legal counsel.