Agent’s Provision of Visual Inspection Documentation

Concern: Some REO Sellers and their Listing Agents seem to adopt a pretty stern approach to the sale, calling the shots and trying to control the entire process. This is common, and can also be dangerous. Here are some pitfalls to avoid:

“My Seller is not required to supply a Transfer Disclosure Statement. Since they are exempt, I do not have to complete the Agent’s Visual Inspection portion of the TDS and therefore, I do not have to provide a written visual inspection.” This is wrong! Every Listing Agent and Selling Agent of residential properties (1-4 units) is required to perform a reasonably competent and diligent visual inspection of accessible areas of the property offered for sale and to disclose in writing their findings of material items. Just because the REO Seller is TDS-exempt does not change the disclosure law for either the seller or the Agent.

Solution: Usage of the Agent’s Visual Inspection form (from CAR in California) or similar documentation can satisfy this requirement.

Also, describe what you see, but don’t guess as to the cause. Real Estate Licensees are not Engineers or General Contractors; they have no place stating something like “normal settling” or “normal cracking.” Simply state what you see, but never why it is there.

Avoid the temptation to use a silver bullet phrase, such as “Agent recommends that Buyer obtain Physical Inspection.” That does nothing to show that you performed your own visual inspection. Keep in mind that this statement would also be included in numerous other documents, such as the Buyer’s Inspection Advisory.

Additionally, the disclosure should be specific to the Property. It is not a marketing or advertising document, and should not point out features such as lovely views, handcrafted finishes, and so forth. It should point out negative aspects, such as stains on carpet, stains on ceilings, chipped paint, a warped or sticking door, torn or missing screens, chipped tile, scratches in hardwood flooring, and similar issues.

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published February 5, 2012

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