You say property condition disclosures are “tardy” if they aren’t provided before an offer is accepted. But why is it necessary to provide these disclosures before accepting an offer? The buyer can just cancel if the property conditions aren’t what they expected.
Well, consider it first on a purely practical standpoint: when you’re shopping for something, do you prefer to be given all the facts and make an informed decision, or do you prefer to make a blind offer, crossing your fingers in hopes the product is exactly what you want? Chances are, you prefer the first option.
It’s no different in real estate transactions. A buyer who makes an offer without the benefit of full property disclosures is essentially submitting their offer blind. They lack the material facts required to make an informed decision about what price to offer, or even whether to make an offer.
The process of placing the property under contract is corrupted due to asymmetric knowledge of property facts by the buyer and seller. Why waste time and effort accepting the offer before disclosure when disclosing material facts is both more expedient and more transparent? [See first tuesday Form 304]
Related article: Holmes v Summer: dilatory disclosures and the damage done
If that doesn’t appeal to your sense of practicality, let this sober you up: pre-offer disclosure is mandated by case law and statute. [Holmes v. Summer (2010) 188 CA4th 1510; Calif. Civil Code §2079.14(d)]
Real estate law requires disclosures to be made as soon as practicable. And it’s absolutely practicable for the seller’s agent to deliver disclosures about a property’s condition before their seller enters into a purchase agreement with a buyer. Material facts about a property’s condition are accessible to the seller’s agent for marketing purposes. With this marketing information in hand, the seller’s agent has no justification for withholding disclosures until after the acceptance of an offer.
So, don’t send tardy disclosures just because the trade union forms or some nebulous idea of “standard practice” tell you to. The buyer’s ability to cancel didn’t protect the seller’s agent in the Holmes case, and chances are, it won’t be enough to protect you, either.
For an additional discussion of disclosures, please see Volume 13 of the first tuesday Realtipedia, Due Diligence and Disclosures (Chapter 8: Due Diligence Obligations).
The first tuesday Realtipedia is your premier 16-volume library of real estate guides, and an included service with your enrollment. Want more Realtipedia? Log in to your account with your license number and last name, and click on the Realtipedia link. The Realtipedia is also available for purchase in hard copy format here.