Real Estate Round-Up: D is for disclosure

The word “disclosure” is a noun that means the action of making new or secret information known. Its antonym is concealment.

What a simple definition, and the antonym is equally simple and profound. In California real estate, sellers have an obligation to complete two documents to aid in their required disclosures to the prospective buyers. The first is the real estate transfer disclosure statement and the second is the seller property questionnaire. Both forms are a series of questions about the property.

Some of the questions are benign, like do you have a range, a garage and smoke detectors? Others require a bit more thought, like what kind of roof do you have and how old is it? These types of questions are easy for the seller to answer.

You either have it or you don’t; you either know the type of item and its age or you don’t. But there are questions that many times cause a seller to pause and ask themselves or us: “Should I tell them that?” We chuckle and let them know that if you have to ask, the answer is definitely yes.

Disclosures in a real estate transaction need to be looked at as an opportunity to tell the prospective buyers everything you know about the property; the good, the bad and the ugly. The buyers receive these disclosures within a week of an accepted offer. We provide the sellers disclosures immediately when an offer has been accepted.

Think of it like this: Do you remember when you met your spouse? Early on, when you were head over heels in love with them, they could have told you almost anything, and you still would have wanted to marry them. It’s not that different with a home. Especially in this market, where buyers must fight to get their offer accepted, once they “win” the house, they are going to fight like anything to keep the house.

So, short of telling them that the property is condemned, there’s not much that can scare them away. On the other hand, if you delay in providing the disclosures, the buyers may already have a tiny bit of buyer’s remorse over the price they had to pay or the complication of the purchase process. Whatever the reason, immediate delivery is always the best. Delayed delivery may not go as well.

The key to disclosure is found in the definition above. The buyers know nothing about the property they are purchasing, except that they like it. They either like the location, the style of the home, the price of it, the neighborhood, the amenities or maybe all the above. But they don’t know anything about the stuff inside the home.

They don’t know what is working or what is not. They don’t know what you’ve repaired or what might need to be repaired. They don’t know about the neighborhood or the bigger community. The disclosures are the seller’s opportunity to tell them everything that they know.

Hint, it’s OK to tell them that something doesn’t work. Or that you had a water leak that caused you to have an insurance claim that paid for you to have all those beautiful new floors. It’s not only OK to tell them; it is mandatory to tell them.

Look at the antonym: concealment. That’s not a good word. Sellers, if you know, you tell. If you don’t know, you don’t make up an answer, you say you don’t know or “no.” Remember what I said about when you were first dating your spouse. Ask yourself, if there were things they told you early on that you accepted as part of who they were and you loved them knowing that they told you the truth. It’s not more complicated with a property. Tell what you know, and the buyers will trust you and be thankful for your truth.

While I’m on the topic of disclosure, I’d like to make you aware of some recent information that the San Diego County Water Authority is promoting, while not fully disclosing the impact the Regional Conveyance System will have on the residents of Fallbrook.

First of all, you and I both know that making ends meet is a monthly challenge for many people, especially in these trying times. But unlike the fixed cost of housing, electricity, food or health care, there is something significant residents can do to lower their water bills in the years to come.

The Fallbrook Public Utility District and Rainbow Municipal Water District are seeking to leave the San Diego County Water Authority and begin buying their water from the Eastern Municipal Water District in nearby Riverside County.

You might ask yourself, why make a change? The local water districts have been with the San Diego County Water Authority for a very long time. The single biggest reason is to save money for you, the consumer. FPUD and RMWD will pay less for the water than what they’re paying today, and you would still have a reliable supply of water that you’ve always had because the source of water, from Northern California and the Colorado River will remain the same. It just won’t go through the SDCWA anymore.

Getting back to the disclosure issue with SDCWA, they are currently proposing to build a $5 billion aqueduct to the Colorado River that unnecessarily duplicates the existing connections. Not only does it duplicate something that already exists, but because of where they are proposing to make the connection, it would require building a $1 billion desalination plant to remove all the salts from the water.

More than 47 miles of canals, 47 miles of tunnels and 39 miles of pipeline would have to be created.

These canals, tunnels and pipelines would pass through some of the most beautiful countryside from Anza-Borrego Desert State Park, Cleveland National Forest and the Cuyamaca mountains. It would cross at least six active fault lines, making it subject to damage from seismic activity. Because of the terrain, three pump stations will have to be built, which will add exorbitant energy demands and costs. This additional energy requirement will increase greenhouse gases.

There is no need for additional delivery capacity, as the current MWD Colorado Aqueduct and Pipelines connecting San Diego to the Metropolitan Water District have more than enough capacity to serve the future water supply needs of the San Diego region. Not only is this project unnecessary, but it will also end up costing water ratepayers billions of dollars to repay the loans to build this white elephant through significantly higher water bills.

Thanks to the SDCWA, bills have already risen significantly over the past decade. Ratepayers shouldn’t have to pay even more, especially for a project that won’t provide any benefit to local water users.

Both FPUD and RMWD have submitted applications to the San Diego Local Agency Formation Commission to detach from the SDCWA. LAFCO is currently reviewing the applications and will be voting whether to approve or deny them in the next several months. If approved by LAFCO, the residents of Fallbrook and Rainbow will vote on it.

Disclosure is everything. Whether you’re buying a home or staying involved with community issues, you should rely on thorough and complete disclosure, so you can make an informed decision.

If you want more information on SDCWA's proposed water project or on FPUD and RMWD’s detachment process, go to http://www.fpud.com or http://www.rainbowmwd.com.