Trust sale disclosures and second opinions
Q: My brother-in-law recently passed away and his adult children are co-successor trustees. My husband and I are helping empty the house he has owned for 20 years to go up for sale. My brother-in-law kept a file on every repair or improvement to the property. Yesterday, one co-trustee stopped by and said, “Because we are successor trustees and never lived at this house, we don’t have to disclose anything,” and added, “It’s a trust sale.”
When we sold our house, we filled out two dozen pages of seller questionnaires. Our seller’s agent had also compiled documented improvements and repairs as a disclosure package accompaniment.
Should these co-trustees get a second opinion about trust sale disclosures? Shouldn’t the actual buyer of the property receive existing files on the property?
A: California real estate attorneys would agree with your assessment: ensure they get a second legal opinion and a seasoned real estate agent. The successor trustee selling a California property will use the California Association of Realtors (C.A.R.) Exempt Seller Disclosure (C.A.R. Form ESD, revised 6/21).
The C.A.R. Form ESD has the following limited questions for the successor trustee or probate administrator:
Are you (Seller) aware of any of the following? (Explain any “yes” answers below.)
1. Within the last three years, the death of an occupant of the property upon the property?
2. An order from a government health official identifying the property as being contaminated by methamphetamine. (If yes, attach a copy of the order.)
3. The release of an illegal controlled substance on or beneath the property.
4. Whether the property is located in or adjacent to an “industrial use” zone.
5. Whether the property is affected by a nuisance created by an “industrial use” zone.
6. Whether the property is located within one mile of a former federal or state ordnance location. (In general, an area once used for military training purposes that may contain potentially explosive munitions.)
7. Whether the property is a condominium or located in a planned unit development or other common interest subdivision.
8. Insurance claims affecting the property the past five years.
9. Matters affecting the title of the property.
10. Any other material facts or defects affecting the property, or material documents in the seller’s possession affecting the property, not otherwise disclosed to the buyer. Explanation or see attached (documents).
The last question asks for additional information or documentation known to the successor trustee or probate administrator, which is an excellent risk management tool. Due to actual or imagined problems, homebuyers file most residential home sale dispute claims. Moreover, the buyer’s real estate agent must meet their fiduciary obligation in California, indicated as the “duty of learn the material facts that may affect the principal’s decision.” In other words, the buyer’s real estate agent must provide material facts to their principal, the homebuyer, before closing escrow. As a result, when the home seller assembles a complete presale disclosure package for prospective homebuyers, the risk of post-sale ligation is dramatically reduced, and transaction quality is greatly enhanced.
Do you have questions about home buying or selling? Full-service Realtor Pat Kapowich is a Certified Real Estate Brokerage Manager and career-long consumer protection advocate. He is based in his hometown of Sunnyvale, California. Office Landline: 408-245-7700; Broker# 00979413 [email protected] Broker# 00979413 www.SiliconValleyBroker.com