- The Washington Times - Thursday, February 3, 2005

Even before you sign a contract in real estate — before you’re shown a single property, perhaps — you’ll be offered a pen to put your John Hancock on several forms in duplicate and triplicate.

In our litigious society, it has become necessary for real estate professionals and service providers to let you know about everything before you can do anything.

Some of the forms are required by state edict.

The need for other forms has arisen from sheer necessity. In a seller’s market, this happens when buyers begin to make choices that may backfire later — forgoing home inspection, entering into escalating offers, eliminating appraisals.

The disclosure form or memo of notice verifies for the agent that the buyer was warned of what might happen so that in case it does, the agent can escape liability and have the buyer stew in his own decision.

U.S. Legal Forms Inc. (www.uslegalforms.com) reports: “Over 30 States require that a disclosure form be provided by the Seller to the Buyer as part of the real estate sales transaction. Other States use a disclosure form although not required.”

The libertarian side of me screams, “Stop the madness,” while my corporate side says, “Prevent the liability.”

Here are several of the disclosures you could be looking at with your Realtor or loan officer:

m Agency disclosure. This disclosure form reveals to the buyer, seller, landlord or tenant whom the subject agent works for. Most states have this form. Sometimes, you’ll first have to sign a disclosure form saying that the agent has gone over the disclosure forms before you even sign the disclosure form itself. This is the madness part I was talking about.

The bureaucrats have even provided a line the agent can sign on some forms saying that although he disclosed it to the potential buyer, the person refused to sign the disclosure form. Sheesh.

m Residential property disclosure. This form is referred to by several names — property disclosure, residential disclosure, seller disclosure. They all disclose to the buyer information about the property. The form may include information about the home systems, possible basement problems, and environmental and structural issues.

In some states, you might see a property disclaimer form with the home package, meaning the seller makes no guarantees or promises about the house — and then you’ll want to get a home inspection instead.

m RESPA disclosure. RESPA is the Real Estate Settlement Procedures Act, which protects consumers from sleight of hand and under-the-table expenses.

• Lead-based-paint disclosure. This form is for housing built before 1978, when most paint included lead. This is a federally required disclosure and must be included in all older homes.

• Local disclosure. This one is the jackpot of all disclosure forms. It can be required by the smallest of jurisdictions, which is why you want to work with a real estate professional who can keep you away from the pitfalls.

This form could include disclosure of airport locations, public facilities and local building-code issues that affect the property. Local Realtor associations keep close tabs on local disclosure requirements and keep required disclosure forms in inventory when necessary.

HSH Associates (www.hsh.com) reports several items that a mortgage lender must provide to a borrower when the application is made.

• Special Information Booklet. This contains consumer information regarding various real estate settlement services and is required for purchase transactions only.

• Good Faith Estimate. The Good Faith Estimate of settlement costs lists the charges the buyer is likely to pay at settlement. This is only an estimate, and the actual charges may differ. If a lender requires the borrower to use a particular settlement provider, then the lender must disclose this requirement on the GFE.

• Mortgage Servicing Disclosure Statement. This discloses to the borrower whether the lender intends to service the loan or transfer it to another lender. It also provides information about complaint resolution.

M. Anthony Carr is the author of “Real Estate Investing Made Simple.” Post questions at his Web log (https://commonsenserealestate.blogspot.com).


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