Having purchased more than 10 houses over 30+ years, it's amazing how the process of buying (selling) real estate gets more complicated. Many of the forms you sign at closing don't seem important, if you even take time to read (scan) them. It sometimes feels like every problem causes another document to be created … and signed, like selling our Florida condo. We (my husband and I) had to sign a statement that we had been continuously married between the time we bought the condo for my in-laws, and sold it? Yesterday I received the “Residential Seller's Property Disclosure Statement (SPDS)”, which needs to be reviewed and signed. This property disclosure statement is an amazing document! We've owned property in California (3 houses), Connecticut (1 house), New York (2 houses), Florida (1 condo), Massachusetts (3 houses) and New Hampshire (3 houses). So obviously while not a real estate agent, I've got a fair amount of experience buying houses. As we work our way towards purchasing our newest home in Arizona, I have a lot of respect for the Arizona Realtors® Association. They have developed a standard set of documents that are used in every real estate transaction.
Residential Seller's Property Disclosure Statement
The document is 6 pages long, with an incredible amount of information. So first let's look at an outline of what's included. The lines are a good indicator of how detailed the statement is, with roughly 40% of the document focused on the condition of the house being sold.
- Ownership and Property (lines 1-56)
- Building and Safety Information (lines 57-149)
- Utilities (lines 150-170)
- Environmental Information (lines 171-231)
- Other Conditions and Factors (lines 232-234)
- Additional Explanations (lines 235-251)
Property Disclosure Statement – Ownership and Property
This section of the document focuses on legal matters starting with ownership of the property. Some of the most interesting information included:
- Notice to Buyer – explains that a “subdivision public report” may be available from the Arizona Department of Real Estate or the home builder. It also warns that “the public report information may be outdated”.
- Questions that require the seller to disclose information about associations – from the name (our new home is part of the Neighborhood Property Owners Association or NPOA, and they've got a Facebook page), to fees and assessments.
- Next are questions about clear title, asking sellers to disclose – litigation, assessments, easements, access problems or violations regarding zoning, building codes, etc. This is important if sellers have made improvements to the property without proper permits.
Disclosures about Building and Safety!
Before you review this section of the document, you need to confirm when the house you're buying was built. In fact my house is a perfect example because it was built in 1995, or nineteen years ago. Why is that important? Because each home feature has a life expectancy and many items last 15 to 25 years (see Planning and Budgeting for Exterior Home Updates and Budgeting to Replace/Upgrade Interior Home Components). You'll see confirmation of this with items that have already been replaced on my new … soon to be home. First though, I want to give you a sense of the detail that this property disclosure statement goes into and roofing is perfect for this. Each question is proceeded by boxes where the seller has to check yes or no, so I've included their responses (yes or no) here.
- (no) Are you aware of any past or present roof leaks? Explain …
- (no) Are you aware of any other past or present roof problems? Explain …
- (yes) Are you aware of any roof repairs? Explain …
- The sellers wrote in “Replaced rear patio roof (summit Roofing 2013); Front roof wind damage repair (Barrett Roofing 2006)”
- (no) Is there a roof warranty? (Attach a copy of warranty if available)
- (not checked) If yes, is the roof warranty transferable? Cost to transfer …
Other items included in this section of the property disclosure statement include the following, and I've only flagged those where additional information was provided by my sellers.
- Roofing (described above).
- Interior wall/ceiling/door/window/floor problems?
- Cracks or settling involving the foundation, exterior walls or slab?
- Chimney or fireplace problems?
- (yes) Damage to any structure on the property by (check all that apply) – flood, fire, wind, expansive soil(s), water, hail, other?
- Sellers stated wind damage, along with wind damage repair noted above.
- Wood infestation has multiple questions as termites are a problem in the area.
- Heating and cooling – covers types (both electrical) and past/present problems.
- (yes) Plumbing – in general, water pressure, hot water heater, landscape watering system and water treatment systems.
- Replaced water heater 2013; Replaced watering system 2013.
- (yes) Swimming pool/spa/hot tub/sauna/water feature.
- Replaced pool pump, filter and timer 2013.
- (yes) Electrical and other related systems – covers electrical, security and smoke/carbon monoxide detectors and fire suppression (sprinklers).
- Sellers said the security system is hard wired and a new one is needed.
- Miscellaneous – yikes, they checked off scorpions and reptiles; and like the questions about renovations and permits for this work.
All of this information leads to these follow-up questions for the sellers and/or the home inspector.
- Sellers – what caused you to replace the rear patio roof? and why didn't you get a warranty?
- Home inspector – why did the original rear patio roof fail? and what's the estimated life expectancy for current roof?
- Sellers – as we've been told houses have to be treated for termites every 10 years, why hasn't any treatment been done?
- Sellers/home inspector – regarding lack of smoke and carbon monoxide detectors, which doesn't make sense.
Other Property Disclosure Statement Sections
- Utilities – asks sellers to identify all providers, e.g. electricity, fuel, cable, telephone (none), garbage collection (unknown), fire, irrigation (not applicable) and whether alternate power systems serve the property (not yet).
- Environment – cover problems with property/nearby, like drainage or fissures; noise problems (airport, traffic, rail lines); odors from landfill, toxic waste disposal, etc; proximity to chemical manufacture or storage; near military facilities.
- Most important are questions about asbestos, radon, lead-based paint, pesticides, underground storage tanks, wetlands (funny question in a desert), open or abandoned mine shafts/tunnels/wells, flood plain, water damage/leaks or modl.
- Sewer/waste water treatment – covers sewer and on-site waste treatment systems.
Signatures Tell the Story of the Property Disclosure Statement
The Seller certifies that “the information contained herein is true and complete to the best of Seller's knowledge as of the date signed.” The Buyer (that's me) acknowledges that “the information contained herein is based only on the Seller's actual knowledge and is not a warranty of any kind”. The buyer is encouraged to have a property inspection, which is planned.