Disclosure Laws in Real Estate, California Vs. Illinois - Essay Example

 Business Law: Disclosure Laws in Real E California Vs. Illinois Disclosure laws in California and Illinois residential real estate are not completely different, but they do have some distinct aspects about each of them which are apparent. “California and Illinois have [both] adopted mandatory disclosure laws.”1 Both states require forms to be filled out. However, the liability completely falls on the shoulders of the seller in California, while in Illinois the liability for the property is not completely the seller’s responsibility. “California’s agency disclosure law, adopted in 1988, applies to transactions involving residential property with one to four dwelling units. It requires the real estate agents to disclose their agency status to the parties and give them two different written disclosures: an agency disclosure form and an agency confirmation statement.”2 As stated, this is not altogether uncommon from Illinois residential property law, which also applies to the same amount of dwelling units. Additionally, within the disclosure forms of each state, any defects in the properties must be duly noted. This is confirmed by Galaty et. al. in the book Modern Real Estate Practice in Illinois. “In Illinois, the Residential Real Property Disclosure Act took effect in 1994…[which] requires that sellers of 1- to 4-unit residential properties fill out property disclosure forms revealing any material defects in the real estate for sale. The completed forms should be given to buyers before an offer is made.”3 In law, liability is a serious issue. Liability is basically one’s financial and legal responsibility towards an issue—in this case, for property. One’s financial liability with regards to property includes the fact that the person not only pays their property taxes on time, but also pays all of the utilities. Additionally, financial liability with regard to any sort of property includes the fact that there must be liability with regard to property loss. This is especially problematic in California, where any kind of property loss could preclude a financial liability investigation of such a loss. Legal responsibility with regard to property includes the fact that one must be responsible for any acts which occur on the property. Liability can be a major headache for an individual. If someone does not take responsibility for his or her own property, this could signal danger. Not taking liability for one’s own property could mean various things. It could mean that there would be damage to the property. Liability also implies that nothing sinister has happened on the property, such as a murder. If something like this has occurred on property lines, this could be a major setback for a seller, who wants the best possible record for the seller’s property. Thus, if anything majorly disturbing has happened to the property either—which will be discussed later—such as a natural disaster like an earthquake, a hurricane, or a tornado, could severely impair a seller’s ability to sell a property, based on its previous record. Liability includes the possibility that there are nuisances that occur within or around the property, such as noisy or unkempt animals, a rat problem, or other various issues that could go wrong. Nonetheless, these are all the responsibilities of the seller to cure before he or she sells the house. Liability for a property is a serious issue that must be addressed. The surrounding neighborhood of the property could also be a potential liability issue to which one must attend. If there are registered criminals living in the area, this would probably have to be disclosed on the statement accompanying the sale of the residential property. Any details which could augment the buyer’s view of what the house looks like and what actually happens in the neighborhood could potentially affect the seller’s liability. Therefore, any and all liabilities with regard to the residential property must be disclosed. If one is unsure as to whether details should be included or omitted, it is probably a good idea for the seller to just “tell all.” In other words, it is recommended that, whatever problems there are with the house or other properties, that the individual seller offer full disclosure with regards to anything that is wrong with the house, the neighborhood around the house, and/or various other mitigating factors that would not make the residential house or property salable. This is not only to be fair to the seller, but it is also because the potential buyer must be aware of what he or she is entering into. If a buyer enters into a contract and then later down the road discovers that the house or property he or she paid for is not exactly what was described in the deal, the buyer could potentially sue the seller for not having disclosed all of the salient details regarding the property. Thus, it is in the best interest of the seller to be completely truthful in filling out the necessary disclosure forms when selling the house. The buyer, additionally, has some elements to worry about when buying a property. The astute buyer should leave no stone unturned. Does the seller seem wary? Does the seller seem like an honest person? Is the seller really being honest or does the seller appear that he or she is trying to hide defects in the property and therefore bamboozle the buyer? Other questions a buyer might ask is if the seller has ever had any type of problems living in the current neighborhood. The seller should be completely honest about these facts and not try to deceive the buyer by camouflaging, hiding, or otherwise omitting important details. These are the obligations of the seller to the buyer. The seller should comply with the law and address any issues that are cogent to the sale of the property. Liability is one issue which can be a sticking point that causes trouble for many sellers, but most of all would seem to be an issue in California. Sellers in California are at a severe disadvantage when it comes to having to disclose issues regarding defects in their property. This could be a major setback when someone wants to sell property in California. “California sellers must fill out and give the buyers a disclosure form listing a broad range of defects—such as a leaky roof, deaths that occurred within three years on the property, neighborhood nuisances such as a dog that barks every night, and more.”4 Not only this, but there is an additional aspect with regard to selling a piece of property which must be addressed: the Natural Hazard Disclosure Statement. “In addition, California sellers must disclose potential hazards from floods, earthquakes, fires, environmental hazards, and other problems, in a Natural Hazard Disclosure Statement. California sellers must also alert buyers to the availability of a database maintained by law enforcement authorities on the location of registered sex offenders.”5 California sellers also face an additional statement of disclosure in additional to all of the statements of disclosure previously discussed. California law also requires sellers to provide information regarding its impregnability as well as how the house would hold up during a force majeure. “In addition to the Natural Hazard Disclosure Statement, state law requires sellers to provide information on the safety of the house itself and its ability to resist earthquakes.”6 Sellers in Illinois, however, are at an advantage with regard to disclosure law in residential real estate. Illinois law is much less stringent. If there is even a doubt about what the seller did know or did not know, pretty much that seller is off the hook—in other words, the seller is not at fault. In Illinois, the liability of the seller is as follows. “The seller is not liable if the seller had no knowledge of the error, inaccuracy, or omission…, [if] a material defect or other matter not disclosed had been corrected[, or if an] error, inaccuracy, or omission was based on information provided by a public agency or by a licensed engineer…”7 With regard to Califronia and Illinois residential property law, obviously California is much more stringent in regards of its disclosure law. Thusly, the forms that are necessary to fill out may be the same, but the liability of the seller is different. REFERENCES Atlantic Reporter: Second Series, Vol. 657. USA: West Publishing Company, year unknown. Galaty, Fillmore W., et. al. Modern real estate practice in Illinois. USA: Dearborn Financial Publishing, Inc., 2001. Haupt, Kathryn, et. al. California Real Estate Practice. USA: Rockwell Publishing, 2005. Randolph, Mary. Deeds for California Real Estate. USA: NOLO, 2006. Required Disclosures When Selling Real Estate. http://www.nolo.com/legal-encyclopedia/article- 30027.html. Retrieved 1 Nov 2009. Residential Real Estate 2008 Edition. USA: Illinois Institute For Continuing Legal Education, 2008. Read More