Q: My office is confused as to when the newly-released CAR Fire Hardening and Defensible Space Advisory, Disclosure and Addendum form (“FHDS 5/21”) is to be used. Please explain when the new form must be used and why it was released a month earlier than the rest of the newly-revised CAR forms? Can you also explain how Sellers are to know if they are in a high or very high fire hazard severity zone?
A: There could well be confusion about how and when to use the new FHDS form because it covers two separate, statutory Seller disclosure requirements that were to go into effect at two different times and the factors that trigger the need for these two disclosures are also different.
This Tip focuses on the two separate parts of the new form, the requirements for when a Seller must complete the two separate parts and where to obtain additional information about each subject.
I. FIRE HARDENING DISCLOSURE – Paragraph 3
A. What Needs to be Disclosed?
For new construction of residential properties (1 to 4 units) built after January 1, 2010, the builder must meet the State’s requirements to use materials that are designed to make a home less vulnerable to wildfires and flying embers. Properties built before that date may be more susceptible to fire.
Effective January 1, 2021, some Sellers of residential property built before January 1, 2010 must disclose whether they are aware of 6 specified elements that may make their property more vulnerable to wildfire.
There is no obligation for the Seller to upgrade, repair or remove any or all of these elements. This law is strictly an obligation to disclose the Seller’s awareness of these items. If the Seller does not know, or is not aware, of any or all of these 6 specified elements, the Seller does not check the boxes next to those items. The Seller’s lack of awareness does not negate the need to use the form.
See also Weekly Practice Tip: “Home Fire Hardening Disclosure Requirements” (12/18/20)
B. Which Sellers Must Make the Fire Hardening Disclosure?
Civil Code Section 1102.6(f) specifies that the Fire Hardening Disclosure along with a statutory warning about Wildfires must be given by Sellers to Buyers if the following 3 requirements are true as identified in Paragraph 1.A(1):
- The Property is residential (1 to 4 units) located in a high or very high fire hazard severity zone;
- The Property was built before January 1, 2010; and
- The Seller is obligated to fully complete a Real Estate Transfer Disclosure Statement.
If any of the above 3 requirements are not true, the Seller is not obligated to provide the disclosures in either the original CAR HHD (12/20) or the combined disclosures in the new FHDS form.
II. DEFENSIBLE SPACE REQUIREMENTS – Paragraph 4
A. What Needs to be Disclosed?
Civil Code Section 1102.19 requires that some Sellers must disclose whether the Property is subject to a local ordinance requiring vegetation management – i.e., local rules regarding the creation and maintenance of a defensible space around the Property to minimize the likelihood of fire damaging any structures. Most local jurisdictions have not yet enacted any vegetation management ordinances and therefore do not have the means of generating documentation to establish that any property is, or is not, in compliance.
Paragraph 4 of the new FHDS form has 4 options for Sellers; the default choice (4A) is that there is no local ordinance and thus it is the responsibility of the Buyer to obtain compliance documentation within one year of the date escrow closes, but only if there is a local mechanism in place to have Authorized Inspectors inspect the Property and issue appropriate documentation. Since there are currently very few applicable local ordinances, the default choice is the one that will be used most often.
B. Which Sellers Must Make the Defensible Space Disclosure?
The defensible space disclosure must be made in transactions that closes escrow on or after July 1, 2021 by Sellers to Buyers if the following 2 requirements are true as identified in Paragraph 1.A (2):
- The Property is residential (1 to 4 units) located in a high or very high fire hazard severity zone; and
- The Seller is obligated to fully complete a Real Estate Transfer Disclosure Statement
The date the Property was built is not relevant to the Defensible Space disclosure requirement.
III. POTENTIAL BUYER RESCISSION RIGHT
The codes which create these two disclosure obligations are in the same statutory section as the TDS. It is therefore arguable that the late delivery of the FHDS may create the right for the Buyer to rescind (or cancel) the transaction. CAR decided to release this new form one month earlier than the other forms set for release in June so as to make sure that current deals closing on or after July 1st will include this form.
Because of the potential for a buyer rescission right, the best practice is to deliver the Seller’s completed FHDS form at the same time as the TDS is delivered to the Buyer.
IV. ADDITIONAL INFORMATION
Brokers are not required to determine if a Property is located in a particular fire hazard zone. Sellers who are uncertain about the fire hazard zone for their property should be urged to review a current NHDS report or go to the CalFire website http://fire.ca.gov/. CalFire’s “Fire Hazard Severity Zone Viewer” may be used to determine if a property is in a fire hazard zone, Additional information on minimum annual vegetation management standards to protect homes from wildfires, along with information about home hardening, may be obtained at: http://www.readyforwildfire.org
PRACTICE TIPS:
1. With respect to transactions that may, or will, actually close on or after July 1, 2021:
A. Start using this form with all such transactions.
B. If the Buyer has already received the HHDA form, then only Paragraphs 3, 4 and 5 of the FHDS need to be completed.
2. Keep in mind that delivery of the FHDS form after providing the TDS could arguably create a right to rescind thus the FHDS needs to be delivered at the same time as the TDS.
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