Property Expense Profile — RPI Form 306

Seller disclosures

A seller’s broker and their agents have a special fiduciary agency duty, owed solely to the seller who employs the broker, to diligently market the listed property for sale. The specific 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 buyer’s agent, the seller’s agent owes the prospective buyer, and by extension the buyer’s agent, a limited, non-client general duty to voluntarily provide critical factual information on the listed property. Collectively, this delivery of critical information is referred to as a disclosure of material facts. Absent this delivery of factual information about the property and its operations, an asymmetry of information exists. [See RPI e-book Real Estate Principles Chapter 14]

The methods for gathering adverse facts about a property’s fundamental characteristics, as well as facts which enhance value, require the seller’s agent to actively take steps to make specific disclosures when marketing a one-to-four unit residential property for sale, actions which include:

• conducting a competent visual inspection of the property to observe conditions which might adversely affect the market value of the property, and then entering any observations of adverse conditions on the seller-prepared Transfer Disclosure Statement (TDS) [See RPI Form 304];
• assuring seller compliance with the seller’s duty to deliver statements to prospective buyers as soon as possible by providing the seller with statutory forms at the listing stage to be filled out, signed by the seller and returned to the agent for review, confirmation and inclusion in the marketing package to be handed to prospective buyers on their inquiry into additional property information;
• strongly recommending the seller obtain third-party inspections of the property’s condition and its components (roof, plumbing, septic, water, etc.) to reduce the exposure to claims by a buyer who might discover deficiencies in the property not known to the seller or the seller’s agent; and
• responding to inquiries by a prospective buyer or buyer’s agent into conditions relating to any aspect of the property with a full and fair answer of related facts known to the seller’s agent which are or might be considered detrimental to the value of the property.

As a minimum effort to be made before handing prospective buyers information received from the seller, the seller’s agent is to:

• review the information received from the seller;
• include comments about the agent’s actual knowledge and observations made during the visual inspection of the property which expose the inaccuracies, inconsistencies, false nature or omissions in the seller’s statements; and
• identify the source of the information as the seller.

A seller’s agent on a one-to-four unit residential property owes no affirmative duty to a prospective buyer to gather or voluntarily provide the prospect with any facts unknown to the seller’s agent about:

• the property’s title conditions;
• the operating expenses for the property (and any tenant income) the buyer will experience during ownership [See RPI Form 306];
• the zoning or other use restrictions which may affect the buyer’s future use of the property [See RPI Form 309];
• the income tax aspects of the buyer’s acquisition (or seller’s disposition) of the property;
• the suitability of the property based on the facts disclosed to actually meet the buyer’s objectives in the acquisition; and
• information on data on any mixed use of the property.

However, when asked by the prospective buyer or a buyer’s agent about any aspect, feature or condition which relates to the property or the transaction in some way, the seller’s agent is duty-bound to respond fully and fairly to the inquiry. The response includes material facts known to the seller’s agent about the subject matter of the inquiry, and consists only of factual statements, free of half-truths, misleading statements or any form of deception.

Conversely, it is the buyer or the buyer’s agent who has a duty to care for and protect the buyer’s best interests in the purchase of property. The buyer’s agent, not the seller’s agent, is to determine what due diligence efforts are necessary to learn the extent to which the facts disclosed by the seller’s agent interfere with the buyer’s expectations for the use and enjoyment of the property before allowing the buyer to make the decision to purchase or close escrow.

Disclosing operating expenses

When a prospective buyer requests more information about the operating expenses from the seller and seller’s agent, the seller’s agent uses the Property Expense Profile to disclose the residential property’s operating costs. [See RPI Form 306]

The Property Expense Profile is a worksheet the seller’s agent hands to the seller to complete to the best of their knowledge. It contains estimates of the monthly operating expenses incurred while maintaining ownership of their residence. [See RPI Form 306]

The Property Expense Profile, completed by the seller with assistance from the seller’s agent, is to be handed to prospective buyers (or tenants) for their review as part of a thorough marketing package for the sale of a one-to-four unit residential property or the lease of any type of property. [See RPI Form 306]

The worksheet discloses the monthly property operating costs and deposits the buyer may expect to incur on taking possession of the property. [See RPI Form 306]

While the disclosure of operating costs on residential property is not mandated by law, as a matter of best practices, real estate agents and brokers use the Property Expense Profile in all transactions to promote greater transparency, thereby making the property more marketable.

Alternatively, when the seller’s agent did not elect to include this information in their marketing package, buyers and their agents may request the seller and their agent fill out and provide the worksheet. Delivery of the worksheet, whether automatically as part of the marketing package or upon request by the buyer and the buyer’s agent, provides the buyer a firmer grasp of the true costs associated with owning a particular home, and it’s ongoing costs of operation.

Greater transparency leads to more informed, successful homeowners.

Property expense profile contents

An owner and their sales or leasing agent uses the Property Expense Profile published by Realty Publications, Inc. (RPI) when preparing a marketing package for the sale of a one-to-four unit residential property or the lease of any type of property for disclosing the property’s ongoing operating costs. The prepared worksheet is handed to prospective buyers and tenants for their review of the monthly operating costs and deposits they will likely incur on taking possession of the property. [See RPI Form 306]

The Property Expense Profile contains:

• Property Type information, including:
  • the location [See RPI Form 306 §1.1]; and
  • whether expense figures reflect actual current expenses of ownership and occupancy, or forecasts anticipated expenses [See RPI Form 306 §1.2];
• Monthly Operating Expenses, including:
  • electricity;
  • gas;
  • water;
  • TV (cable/satellite) with a blank space for naming who their provider is;
  • phone;
  • internet with a blank space to enter the company providing the service and the type of service available;
  • trash;
  • sewage;
  • general obligation bonds with a blank space for including what they are;
  • lawn/gardening;
  • maid/housekeeping;
  • pool/spa;
  • HOA;
  • maintenance and repair;
  • property management services;
  • insurance with a blank space to specify the provider and type;
  • taxes with a blank space to include which type;
  • a blank space for listing other monthly expenses not included in the list;
  • total operating expenses based on the sum of all the above inclusions;
  • the monthly mortgage payment, including principal and interest; and
  • total monthly expenses, obtained when total operating expenses and mortgage payments are added together [See RPI Form 306 §2];
• Deposits, including:
  • the rental security deposit;
  • electricity deposit;
  • water deposit;
  • sewage and rubbish deposit;
  • gas service deposit;
  • phone service deposit;
  • a blank space for other types of deposits not included in the above list; and
  • total deposits when all the deposit amounts are entered and totaled [See RPI Form 306 §3]; and
• Signature of the owner and a space for the buyer’s signature affirming they have received and read a copy of the estimate. [See RPI Form 306]

The seller’s broker and agent also enter their identifying information at the bottom of the form.

Form navigation page published 02-2022.

Form last revised 2017.

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