PRDS Forms Update, Including Recent Revisions To The REPC
By David Hamerslough
January 08, 2021
The PRDS Forms Committee recently revised the REPC and introduced new forms addressing fair housing, home hardening, and the risks associated with visiting property. These forms went online in December 2020. The following is a general discussion of the revisions to the REPC and the three new forms.
Revisions to the REPC
A new Paragraph 8(H) has been added to the REPC. It provides as follows:
Buyer shall have 5 (or □ __________) Business Days from Acceptance to approve the cost and availability of adequate homeowner’s (i.e., “fire and liability”)insurance coverage that will protect Buyer’s interests and/or meet any requirements imposed by Buyer’s lender, if any.
The Committee added this contingency because of the issues buyers are facing in being able to secure reasonably priced insurance coverage. While this issue has existed whether the offer was contingent or non-contingent, it has become especially acute given the prevalence of non-contingent offers.
The language of the contingency spotlights that the issue buyers have been confronting includes both the cost and availability of adequate homeowners’ insurance. Paragraph 16(A) of the prior version of the REPC included language addressing both of those issues; that language has now been removed due to the creation of ¶ 8(H).
Paragraph 10 of the REPC now includes a new disclosure in response to a law that went into effect January 1, 2021. This law requires that a seller of residential property (1-4) must make a statement to a buyer if the property is located in either a high-fire or very high-fire hazard zone and the home was built before January 1, 2010. If the property was built before January 1, 2010, a seller will need to disclose whether they are aware of certain problems or conditions at the property that may increase the fire potential. This new law is referred to as the Home-Hardening Disclosure.
Paragraph 10 of the REPC now includes this new statutory disclosure, which provides as follows:
… If the Property was built before January 1, 2010, a home hardening disclosure, with a statement of features that Seller is aware may make the Property susceptible to wildfires and, if Seller has obtained one, a final inspection report pursuant to Gov. Code §51182.
A checkbox has been added to the bottom of the first paragraph of Paragraph 10, which is to be checked if the seller needs to make the Home-Hardening Disclosure.
The PRDS Home-Hardening Disclosure (HHD) is one of the new forms that the Committee released in December 2020. Among other things, the form provides that the best method to determine whether a property is in a high-fire or very high-fire hazard zone is by contacting a Natural Hazards Zone Disclosure (NHD) company or review an NHD report that is designed to assess whether properties are located in certain hazard zones as shown on various maps. The form also provides that if those sources are inadequate in terms of making this determination, then the seller should consider making the required disclosures if the property is located in or near a mountainous area or forest-covered lands or is surrounded by brush or grass-covered lands or land that is covered with flammable material. A seller is also free to voluntarily make these disclosures even if not required by law to do so.
The second half of the HHD contains both the statutory notice and those home/fire-hardening features that a seller may be aware of that may make the home vulnerable to wildfire and flying embers. If the property qualifies, a seller must disclose those features that they are aware that make the home vulnerable in these ways. The seller should check all of the six boxes that they are aware of if they apply. On the other hand, if the seller does not know or is not aware of the existence or non-existence of these features, then the boxes do not need to be checked.
Finally, the new home-hardening disclosure law allows a seller to obtain a final inspection report on these issues pursuant to Govt. Code § 51182. The HHD (¶ D) provides a space for the seller to indicate whether they have obtained such a report and allows a seller to attach the report to the disclosure form or indicate where a copy of that report may be obtained.
Fair Housing Laws and Discrimination Advisory
Federal and state housing laws mandate that all housing must be made available to all persons. Unfortunately, despite these laws, equal access to housing remains a problem, as discrimination still exists. Discrimination in housing means showing a bias against, or a preference for, anyone who is in a protected class as defined by either federal or state law. Not every case of discrimination is based upon intentional conduct. Discrimination cases are judged by the effect of a real estate licensee’s words and actions on the recipient. Often, discrimination is the unintended effect of a licensee’s words and actions or is a result of the licensee’s making assumptions based upon an individual’s race, gender, familial or marital status, characteristics, etc. The remedies available to one who has been discriminated against include recovery of out-of-pocket losses, emotional distress damages, civil penalties or punitive damages, attorneys’ fees, etc., and/or the suspension and/or revocation of your license.
Given the foregoing, the real estate industry has become more proactive in bringing these issues to the attention of its members and the public. The PRDS Fair Housing Laws and Discrimination Advisory (FHL) addresses these issues. It identifies the federal and state fair housing laws, provides a list of the protected classes or characteristics as specified by the California Department of Fair Employment and Housing, identifies who must comply with fair housing laws, identifies the ethical and legal requirements that apply to real estate licensees, and identifies sources of additional information on the subject of discrimination.
The FHL underscores that it is not to be used as a substitute for consulting with a qualified California real estate attorney and/or a local landlord-tenant attorney on the subject of fair housing laws. These laws can be challenging in terms of their application to a given set of facts and circumstances. The disclaimer in the FHL was added to emphasize this point.
In addition to the disclaimer, another distinguishing feature of the FHL is that does not contain any examples of what may constitute discriminatory words or conduct. One of the more controversial examples contained in the C.A.R. advisory on this subject is a discussion of buyer support/interest letters.
The Forms Committee is in the process of finalizing a new form to address this issue. The form will be an amendment to the PRDS listing agreement, which is also in the process of being revised. This amendment will include, among other things, an instruction from the seller to the real estate broker as to whether the seller will or will not accept or review any buyer-support letters and provide appropriate instructions for how that issue can be addressed in the MLS.
PRDS Risks of Visiting Property Advisory
The last form that the Forms Committee has recently introduced is the RVPA, which is intended to warn visitors about some of the common problems and/or hazards that may be encountered when viewing listed properties. The form covers the following subjects: visitor safety, animals/pets at the property, bringing minors to listed properties, risk of injury, and recording devices. The RVPA is not intended as an all-inclusive list of all possible risks. Rather, it has been compiled to provide visitors with some effective risk-management advice to help avoid problems during visits to properties that are for sale or rent.