Tree Disclosures

[duff]

I’ve got a determined little round-robin research project underway, and can think of few more fruitful places to toss this up. If you've already got some fieldwork underway on this, let's join forces.

Here’s the skinny-

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Question:

How to get mandatory tree hazard inspection, detailed reporting, and formal disclosures into the standard real estate sales document package, just like termites and dry rot in the built structures.

Is there any reason why insurance and finance companies would not get behind this whole-heartedly?

Can you think if a clearer path to raising rudimentary awareness and protection for the adult homebuyers who will manage the other 80% of the urban forest with their birthday-present chainsaws?

Thoughts? Comments? Next move?

 

[NeTree]

Got my vote!

 

[M.D. Vaden]

I had special forms made, about 1990, for that, and full landscape evalution to estimate the value of a landscape, or the financial liability, hazards, and potential damage.

This was put in all of our advertising for one year, including our newspaper ads.

Not one person or organization was interested.

We have a fairly experienced real estate person that has helped us.

He mentioned that when tree people and designers, in Portland, claim that trees and landscaping add value, its mostly hype.

The concept is not that it adds value, like value justifying raising the selling cost to include all the landscape improvements.

Ocassionally, people are willing to pay the extra price because they choose to. But in general, boosting the selling price can limit how many people even come.

So there is a good and a bad side to the matter.

 

[Keener]

I have been thinking the same way for the last year or so and when you realize how many millions if not billions of dollars have been spent in litigation over that tree or Leyland hedge that was not an issue until after you moved in and noticed total shade in the yard for 10 months out of 12.
That and the fact that people are killing each other over these things ( at least two recent murders in the U.K.).
Why not get a report on the trees and hedges before you buy a headache.
The resistance I think, is partly from the agents who don't want another issue to dampen the buyers enthusiasm.
I priced out a removal on a single monster tree for people who had just moved in and found out that the neighbors car had been damaged recently by a limb off their tree. I told them it would be cheaper to resell the house ($7000 job).

 

[duff]

Hmmmm.
Does Termite & Dry Rot Inspection dampen buyer enthusiasm?
What about mandatory disclosure in the negative/affirmative/don't know format

Though all terms of real estate contracts are (of course) negotiable, in Southern California the SELLER is generally responsible for the cost of providing the Termite Inspection Report to the principals in the sale transaction, and for eradication & mitigation of all Category I & II (major & nearly major) problems reported.

This often includes thousands of dollars worth of wood replacement, pesticide tenting, soil movement, moisture elimination, etc. All of this takes place, including a certificate of completion, prior to an escrow closing.
I
n Cali, sellers must also fill out a copiously detailed disclosure form, revealing everything from leaks to recent deaths to neighborhood nuisances to local sex offenders to.
There is also required reporting of flood and earthquake zones, environmental hazards such as mold, lead paint, bad water, etc., and potential for damages therefrom. All of these are usually provided to the seller's agent by vendors of such information, as a package, and again usually paid for by the seller.
The seller (or the seller's agent) usually delivers copies of the report or certificate of completion and the full disclosures to the buyer, and both buyer and seller must initial and sign throughout that they have understood and accept the situation. The escrow and financing companies also get copies.

Smart sellers do all the pest control work before the buyer-locating work, to avoid any escrow-breaking surprises.
Whoever pays for it, the cost is minimal when compared with the potential risk.

Smart buyers order independent termite inspection and home inspection reports. Sometimes the buyers offer is made contingent upon successful resolution of disclosed/reported issues.



While I do not think California law REQUIRES the pest control completion certificate (and every state is different in this regard), very few lenders will consider a property transaction without it, for what should be obvious reasons. Might these same considerations drive (and similarly obviate) mandatory tree hazard inspection, disclosure, and mitigation?

More can be gleaned at NOLO Press:Required Disclosures When Selling Real Estate

Valuation and/or appraisal are closely related other matters; perhaps.

Traditionally, the cost of the property appraisal is borne by the buyer in SoCal. It, too, is required prior to escrow closing if financing is involved. Generally the bank (or what-have-you) orders the appraisal done by one of their own phalanx of acceptably certified appraisers, as a preliminary step to making a firm financing offer. They like to know and control the loan-to-value ratio, again, understandably.

My initial thought was that homeowners' insurance companies could be the most ardent champions of tree hazard inspections. However, in my recent personal escrow experience, the insurance company did not even send an inspector. They received a change of lienholder from the finance company, which itself required adequate insurance coverage. It was the finance company that insisted on the inspection docs.

Where to begin targetting an outreach/education effort of this scale?
Button, Button, Where's the Button?

 

[John Paul Sanborn]

Your best bet is to find some agents who work more as "buyer agents"(BA). The selling agent cannot point out any defect, or do anything that would not be in the sellers best interest.

Since inspections are in the buyers best interest, and the BA is legaly acting in the buyers best interest, then they should be the ones advising that someone look into this situation or that.

 

[duff]

Yep, they could be the ones, but...
Many, if not most buyers are just as unaware of the existence of buyers' agents as they are of arborists. Heck, most people struggle to select a competent gardener. Buyer's agents, while more common than they used to be, are still not an integral part of the real estate selling equation, at least in California.

The listing agent's broker is traditionally compensated a percentage of the sale. In So Cal, typically 6% commission, with some variation/negotiation. Half of that commission, or 3% of the sale price, goes to the selling agent, which (if I understand correctly) may be the buyers agent (with contractual fiduciary responsibility) or may not. Indeed, by merely disclosing the fact, a real estate agent can and frequently does serve as fiduciary agent to both/all parties in a property transfer.

It is therefore (undeniably) monetarily beneficial for an agent to both list and sell any given single property. There is an inherent ethical gaff there which remains largely unacknowledged, and which disclosure (IMO) does not mitigate.

Okay, these wrestles for the Real Estate Webboard, maybe.
= )
To clarify, I am not looking for ways to make a connection to find work. I work in a decidedly urban area where I have as much work and referral to others for work as any one person could possibly manage (yes, partly from RE agent referrals, I'll concur).

I am looking to raise the profession, though.
Presumptuous? Perhaps.
Write it off to youth, if you're so inclined.
Going to continue this on ISA...now that seeds are planted everywhere.

 

[John Paul Sanborn]

It all depends on what demographic of the market you are looking for. I've found that many people in the high end of the market have retained a buyers agent and will shuffle through weekend homes like some people change cars.


Indeed, by merely disclosing the fact, a real estate agent can and frequently does serve as fiduciary agent to both/all parties in a property transfer.

by law the agent must act in the sellers best interest unlest contractually linked to a specific buyer. They cannot specificly point out defects or say anything that may discourage the buyer from the sale without the legal relationship (I've gotten into dabling in rehab/resale).

It is therefore (undeniably) monetarily beneficial for an agent to both list and sell any given single property.

These are really ythe same thing, the listing agent is woring for the buyer.


I am looking to raise the profession, though.

maybe the public awareness of the profession. What inspections are required by law in your area, and which are just part of the demands of the market?

No termites here, too cold for them.

City does qualtiy of life inspections, eg repair gutter, fix window sash...Seems to me the "home inspection is something that the buyer does to ensure he does nto get suprised a the next time it rains .

 

[duff]

These are really ythe same thing, the listing agent is woring for the buyer.

Mmm...not sure I agree there...
Seller pays the commission.
Lots of buyers think the agent they call is working for them, but unless there is a formal contract allying the agent with the buyer's fiduciary interest...the listing agent and all the showing/selling agents are actually working for the seller, no?
Where the listing and selling agent are one (which some brokers just do not touch, by the way), isn't there a primary obligation to the seller who pays?


...yes, the public awareness of the profession, precisely.

What inspections are required by law in your area, and which are just part of the demands of the market?

Well,
beyond basic structural problems and lead paint, California Sellers must pay to determine whether their property is located in one or more of the following six zones:

-Flood hazard zones subject to unusual flood risk,
-Inundation zones subject to flooding in the event of a dam failure,
-High fire hazard severity zones as described on a FEMA Map,
-Wildlife fire areas where the state rather than local agencies have responsibility for fire suppression,
-Earthquake fault zones, and
-Seismic hazard zones subject to unusual ground movement during earthquakes.

Also, Sellers must provide Buyers with a copy of the "Homeowner's Guide to Earthquake Safety." which is
available from the state, and inexpensive maps can be purchased from state agencies and private companies that provide the hazard zone disclosure research.

Now then,
Megan's Law requires a statement like this:
NOTICE: Many local law enforcement authorities maintain the locations of persons such as sex offenders who might be required to register their addresses. You may contact local law enforcement authorities for information about the presence of these individuals in any neighborhood.

Also, the buyer must must be informed if property is in a district or districts where owners are assessed special taxes for services such as police and fire protection. These are called Mello-Roos Districts and the seller must make an effort to get a Notice of Special Tax from each agency that levies these special taxes. Homeowners in these districts receive notices of the special taxes.

And then there's Military Ordnance (sp?) Location, wherein the
Seller must inform the Buyer of all known past or present military training facilities within one mile of the property that may contain potentially explosive munitions.

There is also a private trade association, The California Association of Realtors (CAR), which sells these 3 commonly used forms to its members in California, and they bend over backwards to convice sellers and buyers that homes cannot be sold in California without them (them referring to both the forms & the realtors):

TDS-11, the Real Estate Transfer Disclosure Statement,
NHD-11, the Natural Hazard Disclosure Statement, and
RPA-11, the Eight page Residential Purchase Agreement and Joint Escrow Instructions

I use a Realtor who handles ALL the legal details above, and she uses these last 3 proprietary forms too; but neither are required to close an escrow and transfer property.

 

[M.D. Vaden]

Going back to Duff's original post -

If you read my first reply, it should be evident that this seemed like a good idea to me too.

I think the reason the insurance people would not back it, is that it would be too complex.

First of all, let me say that on the west of Portland, the average house and property is about $300,000.

Suppose there is a house, with the building appraised at $110,000. And suppose its just outside the urban growth boundary here, and the land (let's say 2 acres) is worth $30,000, making the title worth $140,000.

If the 2 acres has 200 to 300 trees on it - wild, cultivated, little, big, old, young - how much would it cost to provide a legal quality evaluation?

And would that make it impossible to sell that title?

I don't know myself, but it came to mind.

One reason it may not be done, or may not be mandantory, is that almost no obstacle prevents someone from calling a tree expert to evaluate the property prior to purchase.

In Oregon, I think its required for real estate agents to tell people about home inspectors. But its not required to hire one.

Many people hire one, some don't. The insurance companies don't even require it for house insurance, nor do they send their own to look at the property or house prior.

(I'll bet a few do in some applications, but I've not heard of one doing it for general home insurance in our neighborhood)

I recall that Farmers Insurance in concerned about the presence of a pool, whether it may be fenced, and whether or not a trampoline has the safety net fence around it.

At least in the mean time, most buyers are free to buy a tree evaluation report.

 

[duff]

Responding to MV Vaden's 2 posts..

....free to buy...indeed...isn't capitalism grand?

My experiences with house insurance and no inspections have mirrored yours.
Once I was very very glad....furnace, oven, stove, garbage disposal, and water heater....one after the other in the first year, all replaced.

That estimate is a question for someone with sufficient experience in that arena,
who's game to take a perhaps-not-so-blind stab ...whoso sure ain't me, yet....still a student of sorts.

As for how many people would even come (if higher value/price for established due to assessed landscaping...) You and I are clearly in different housing markets. There are too many people and not enough houses to go around here...and not much affordable housing...fixers go fast and ridiculously high.
Good trees and landscaping can add 5-30% to the selling price of a home. Scandalous maybe, but people pay for what we want, and want what's marketed well.

No shortage of shoppers at these loan rates either. It's a nice turn from 1992, when values suddenly plummeted by half, and it's been a long climb back.

Worry not, it's getting warmer here and I think our migrating sprawly will reach you sooner than we originally thought.

Are or aren't all appraisals of value subjective, by definition , and therefore to some extent hype?

Were there at one time significant obstacles preventing someone from calling a structural pest inspector?

Can anyone shed light on or share a link to what, specifically, led to the demand for and acceptance of that risk management protocol as a standard practice?

Same question on the evolution of other California/US disclosure practices, such as the CAR disclosure checklist that Realtors must use. How did this become standard practice?

 

[John Paul Sanborn]

Oops, my burst. I guess I should read what I write a little mopre often <g>.

I did meant that the lister is usually the working for th seller.

To rephrase what I ment to say is that any agent showing a home must act in the sellers best interest, unless contractually bound to the buyer. Usually an agent from the listing agency is doing the showing.

Hey Dave, have you approched Orlo on this yet?

In the case where a an agency is representing both parties, then, at least in WI, signed discloseres are required.