Like most purchasers, the last thing you want to do after closing on a property is to drag out the mountain of paperwork and pour over it again. But recently while helping a friend troubleshoot a real estate problem, I realized that some forms, especially those of a disclosure nature, serve double duty long after the sale is laid to rest.

A long-time friend called to ask how her daughter, Sonja, could fight an insurance claim denial. During a bout of high winds, a large portion of a live oak tree in Sonja’s front yard blew off and fell on the neighbor’s garage. When the insurance adjuster came out, he talked to the neighbors who said that something similar had happened a year or so ago and at that time, the tree trimmers said it could happen again.

The adjuster denied the claim saying that the seller should have disclosed it when Sonja bought the house. But she had purchased it only a year ago and the seller (a real estate broker---the plot thickens!) had only owned it for six months before that. The broker/owner had mentioned nothing to Sonja about the unstable tree.

It was clear that hard-data ammunition was needed to establish a timeline of who-owned-what-when and who-disclosed-what-to-whom to state our case to the insurance company. And the seller’s property disclosure form/statement (similar to forms required by law in more than thirty states) might just do the trick. Christy couldn’t find her copy of the disclosure form, so she contacted the closing agent for a copy. Two weeks and forty-two faxes later, the closing agent retrieved the form from the file buried in storage.

The form is typically presented to a buyer before signing a purchase agreement and focuses primarily on improvements to the physical property (house, garage, storage sheds, etc.). But a seller (especially a broker/owner) should note the tree problem on the form in order to comply with full disclosure as well as reduce her risk and liability as both seller and real estate agent.

There was no mention of the tree or its condition on the disclosure form or on the purchase agreement or any related addenda. If the seller/broker had known about it, she failed to disclose it to the buyer.

Sonja then contacted the neighbors to establish the date the tree initially hit their house since it was critical for establishing the timeline. They were sketchy about the exact date, but said they’d try to find the cancelled checks they wrote to a contractor for the repairs---but with no luck.

The next line of defense was to contact the tree trimming company to help determine when they trimmed the tree after the first incident. The neighbor knew the name of the company, we contacted them and obtained the date. Bingo! The initial tree incident occurred during the time the original owner held the property (as later verified by title insurance records and recorded deeds) prior to selling to the broker/owner. The timeline and property disclosure form was presented to the insurance company and the claim was paid.

I was relieved to hear that it was likely that the broker/seller knew nothing of the precarious tree. I’d hate to think that the broker concealed the information and/or blatantly ignored the “latent defects” paragraph in the sales disclosure form that states: “Seller specifically acknowledges that where seller knows of facts materially affecting the value or desirability of the property, whether said facts are readily observable or not, the seller is under a duty to disclose said facts to the buyer”. In addition to being hit with reimbursement of damages (or other legal action) her livelihood could be in jeopardy with fines and/or suspension or revocation of her real estate license.

I immediately went to the filing cabinets where I keep papers for the properties I purchase. I took out several, examined disclosure forms and other documents and was amazed (after nearly thirty years as a broker and purchaser) how many after-closing situations the information could assist in. While it’s true that the forms don’t compare with a good Stephen King read, they’d serve as stronger ammunition for solving a property dispute or collecting on an insurance claim!

Published: August 21, 2000

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