The California Association of Realtors® (CAR) is planning to release a new disclosure form that will help to provide information to buyers of lots and vacant land.
Just about everyone who has had anything to do with real estate in California is familiar with the fact that a myriad of disclosures may be required when someone purchases a residence in the Golden State. The so-called TDS, or Transfer Disclosure Statement, is probably the most familiar form in this regard. Its use is required in practically every sale of a house, condominium, or residential building containing up to four units. It is not so well known that the TDS is not required in the transfer of more than four units, commercial or industrial property, or vacant land.
This is not to say that no disclosures are required in the transfer of those properties. Sellers and agents always have a duty to disclose any known material facts to buyers, regardless of the type of property involved. It is just that the familiar disclosure form is not required in those cases.
A little over a year ago, CAR introduced the Seller Property Questionnaire (SPQ). The SPQ is a three-page document encompassing 35 questions (plus "other") grouped into 12 categories. This questionnaire was meant to supplement the legally-required TDS. Over the years, experience had shown the TDS to be deficient in at least two respects. (1) Although apparently comprehensive, it leaves out a wide range of topics that have been found to be of significance to buyers. (2) It asks questions about the present condition of the property; whereas it is often the case that a purchaser may reasonably want to know about past conditions as well. While the SPQ is not legally required, its use has been proven to enhance the flow of relevant information from buyer to seller.
The Seller Vacant Land Questionnaire (VLQ) has been modeled after the TDS. Indeed, many of the categories of questions, as well as specific questions are the same. For example, both ask questions about the neighborhood. Are there nuisance noises? Is there parking congestion? Etc. Obviously, in the VLQ this is probably going to have more relevance to someone who buys a lot in a residential area than to a developer buying a thousand acres in the desert.
Other question categories shared by both the SPQ and the VLQ include boundaries & access, title, issues related to water, governmental actions affecting the property, and whether there have been any disaster relief insurance or civil payments.
Like the SPQ, the VLQ asks about the past as well as the present. Have there been any lawsuits? Not just, are there any currently? One of the perceived deficiencies of the TDS is that its focus is on the present condition of the property; but, often, buyers want to know what has happened in the past. Even if you have fixed something, like a flooding problem, they want to know about its history.
Although not legally required, use of the SPQ has become common. The standard of practice in the industry is raised thereby, and that is a good thing. As the standard is raised, liability has probably decreased as a result of more comprehensive disclosure.
It can be expected that the VLQ will have the same effect in the sales of lots and land; and this will be a good thing too. The VLQ is scheduled for release in November. Interested Realtor® members can take an early look at it in the "What's New" section of the legal page at car.org .
