WASHINGTON--If the head of the country's largest group o real estate brokers has his way, home sellers in every state will be required to disclose all defects they know about their property in advance of sale.
Harley E. Rouda, 1991 president of the National Association of Realtors is leading lobbying campaign to encourage passage of state laws requiring seller disclosures. Although the 800,000-member Realtor association has not adopted Rouda's plan as its own policy to date, it may do so later this year.
Currently only two states--California and Maine--have mandatory disclosures rules. But legislative efforts are actively under way in 30 states to adopt similar requirements.
Behind the big push for mandatory disclosures are two key rationales, according to Rouda: For protection of the consumer, the home buyer, he says, "no one has more intimate knowledge of the product than the seller." Equally important in his view, standardized disclosures place legal liability for alleged misrepresentations about the conditions of the property more squarely on the sellers shoulders. That, in turn, tends to cut down on one of the fastest-growing legal headaches in the realty brokerage business: Costly liability suits by purchasers against brokers charging they either new of, or should have known about, defects.
Two-thirds of all lawsuits against real estate agents or brokers in the United Staqtes allege misrepresentation or failure to disclose defects, according to Laurene Janik, general counsel of the National Association of Realtors. Very often, she said in an interview, "the broker is the only party (to the transaction) left in town. The selles are long gone and may live out of state.
Janik conceded that one source of opposition to mandatory disclosures are her fellow lawyers in private practice. By having to reveal defects that the purchasers might not otherwise have noticed or blamed on them, said Janik, some lawyers feel their clients surrender "part of their rights" and take on "additional liability" through the disclosure system.
Among questions asked by California's disclosure statement--"Are you aware of" any:
* Environmental hazards, including but limited to, formaldehyde, radon, asbestos, lead-based paint, contaminated soil or water on the property?
* Structural additions, repairs or changes to the property made by previons owners --or yourself--that were or are not in compliance with building codes, or were made without the correct permits?
* Neighborhood noise problems or or "other nuisances" in the area, homeowner or condo association liabilities that may be pending, or any lawsuits against the seller that could affect the property
* Zoning violations, nonconforming uses, or any violations of local subdivision "setback" requirements?
These and other questions are in addition to requests for disclosures of any "significant defects or malfunctions" in the property's interior walls, ceilings, floors, insulation, roof, windows, doors, foundation slabs, driveways, electrical systems, plumbing or septic systems, and "other structural components," according to California law.