This form is used by a seller’s or buyer’s agent when preparing a listing/marketing package or performing a due diligence investigation on a property, to authorize a Structural Pest Control operator to prepare a Structural Pest Control Report for disclosing property conditions to a buyer.
A sellers agent’s general duty to voluntarily disclose property conditions
A sellers broker and their agents have a special fiduciary agency duty, owed solely to a seller who has employed the broker, to diligently market the listed property for sale. The objective of this employment is to locate a prospective buyer who is ready, willing and able to acquire the property on the listed terms.
On locating a prospective buyer, either directly or through a buyers agent, the sellers agent owes the prospective buyer, and thus also the buyers agent, a limited, non-client general duty to voluntarily provide critical factual information on the listed property, collectively called disclosures of material facts.
What is limited about the duty is not the extent or detail to which the sellers agent may go to provide information, but the minimal quantity of fundamental information and data about the listed property which the sellers agent must deliver to the prospective buyer or the buyers agent before the seller enters into a purchase agreement.
The information disclosed by the sellers agent need only be sufficient in its content to place the buyer on notice of facts which might adversely affect the property’s value or interfere with the buyer’s intended use.
The sellers agent uses a Seller’s Listing Agreement when entering into the employment of an owner of a property for a fixed time, to list the property for sale, locate a buyer and sell the property. The Seller’s Listing Agreement gives the agent authority to order out disclosure reports on the property, as this article will discuss. [See RPI Form 102]
The Structural Pest Control (SPC) report
Unlike a Natural Hazard Disclosure (NHD), a Structural Pest Control (SPC) report is not a legislatively mandated disclosure in a California real estate transaction. Most mortgage lenders no longer require a report or clearance.
However, a prudent buyers agent is alert to the rule they are duty-bound to act in the best interests of their buyers. Thus, as a matter of good practice, buyers agents simply prepare purchase agreement provisions calling for the seller to provide an SPC inspection, report and certification when not previously delivered to the buyer or the buyers agent.
Thus, an SPC contingency provision is placed in the purchase agreement to eliminate uncertainty about the property’s condition, regardless of the failure of the buyer’s purchase-assist mortgage lender to confirm the integrity of the improvements on the property. [See RPI Form 150 §12.1(a)]
Upfront disclosures by the sellers agent before the seller accepts a buyer’s offer promotes transparency in real estate transactions and eliminates asymmetric property information otherwise inherent in any transaction. Transparency by upfront disclosure avoids the seller’s and broker’s personal liability for withholding information about a material fact known or should have been known to the seller or the sellers agent until after the seller accepts an offer from a prospective offer — conduct called intentional deceit.
The existence of pests, such as termites, adversely affects the value of property equal to the cost of remediation. Since these facts relate to value, disclosure is compelled before the buyer sets the price and closing conditions to be included in an offer submitted to the seller. [See RPI e-book Real Estate Practice, Chapter 28]
In a transparent real estate market, the report and clearance are part of a competently prepared and assembled marketing package a prudent sellers agent prepares and delivers to prospective buyers on the commencement of negotiations. A buyer’s or their agent’s request for further information on a property constitutes the commencement of negotiations for the purchase of a property. Property disclosures are mandated to be made on commencement of negotiations.
The Authorization to Structural Pest Control Operator
A sellers or buyers agent uses the Authorization to Structural Pest Control Operator published by RPI to authorize a Structural Pest Control operator to prepare an SPC report for disclosing property conditions to a buyer. [See RPI Form 132]
The Authorization to Structural Pest Control Operator form gives the SPC company specific information regarding the requested inspection, including:
- the agent’s contact information;
- the property address;
- the owner’s name, address and phone number;
- the request to inspect and deliver their report or Certificate of Corrective Conditions (when applicable) to the agent;
- who to contact for access to the property;
- who is to pay the fee to the SPC company for their services (owner, buyer or agent);
- where to send the bill; and
- the anticipated fee to be paid for their services. [See RPI Form 132]
Form navigation page published 10-2023.
Form last revised 2011.
Form-of-the-Week: Authorization to Prepare an NHD, and a Structural Pest Control Operator Report — Forms 131 and 132
Brokerage Reminder: Timely termite inspections — eliminate the risk
Article: A home inspection report: the liability shield for a seller’s broker
Article: Risk management practices by the sellers agent in a declining market
Book: Real Estate Practice, Chapter 28: Structural pest control reports and repairs
Video: Eliminate the Risk
