I got a couple of calls this week that are not too difficult to deal with, but have been very common over the years. As a result, I thought it a good idea to share them with you.

1.     The first question normally goes something like this: “My seller is really the child of the person who has owned and lived in the property for the past 30 years. The parent has passed away, and the child is now the individual seller, so I need to do a TDS. Unfortunately, the child has not lived in the house for 20 years and knows nothing about its condition. What do I do?”

The main thing to realize in this situation is that a TDS does not require you to actually know things about a property. It just requires you to disclose what you know. So, in this case, you should have your seller (the child) fill out the disclosure forms as completely as possible. They invariably have some information, like the features of the property, and complete that portion of the form. Then, in the blank lines, have them write that they have not lived in the house for 20 years and therefore do not have the information of a normal seller. In this way, your seller is telling he buyer what they are and are not getting and, more importantly, is complying with his legal obligation to disclose everything he knows. In some deals, the seller will pass away after they have signed your listing and after they have completed an original TDS, but before the house is sold. In that case, turn over the deceased seller’s disclosure, as well as one prepared by the heir. That way we again make sure to cover all of our bases.

2.     The next question I got is a little different twist on the disclosure issue. In this case, we are already in escrow and have delivered all the disclosure documents to the buyer of record. They have reviewed those documents, signed them and returned them to our seller. And then, in the last few weeks of escrow, the contract gets assigned to a new buyer. Of course, in this case the question becomes what do we have to do to make sure that the new buyer/assignee gets the appropriate disclosures.

In this case, it is possible to argue that nothing needs to be done. After all, as assignee the new buyer theoretically steps in to the shoes of the original buyer at the time of the assignment. As a result, since buyer no. 1 saw and approved the disclosures, it is arguable that the new buyer is bound by that approval. That being said, given the fact that most of our lawsuits still arise from disclosure issues, we believe you should do more. Rather than rely on the original buyer’s signatures, take out all of the disclosure documents delivered to buyer no. 1, list them on a separate document and write the following at the bottom: “Received and approved by [buyer no. 2/assignee’s name].” Then have the new buyer sign on the bottom of the page, put it in your file and you are fine. You do not need to have buyer no. 2 sign each disclosure individually. This type of catch all is fine in this circumstance.

As always, plese contact your manager if you have any questions and they will get the Legal Department involved if necessary