Q: Our office has been discussing the new home fire hardening disclosures that will go into effect on January 1, 2021. We understand that CAR will be releasing a new form later this month. Can you please explain if that new form is required and, if so, who is legally-required to complete it? If this disclosure is delivered after the TDS, will it give the Buyer a new right to cancel? How can we best help Sellers provide these new disclosures?
A: Although the new Home Fire Hardening Disclosure and Advisory form that CAR will be releasing later this month is not a statutorily-required form, the contents of that form are required by Civil Code Section 1102.6(f). The form is scheduled to be available the third week of December, 2020.
Note: PRDS will also be issuing its Home Fire Hardening Disclosure form (“HHD”) at the same time that the CAR HHDA form is released.
I. What is Home Fire Hardening?
The term “home fire hardening” applies to several physical aspects of property that can help minimize the chance that a residence will be destroyed by wildfire. The typical home fire hardening features include, but are not limited to: fire retardant roof shingles and roof vents, rain gutters with metal coverings and tempered glass windows. In 2010, the California building codes were revised to require that all new home construction incorporate fire hardening features so as to minimize fire damage.
II. Who is Obligated to Make the New Home Fire Hardening Disclosures?
The only Sellers who are obligated to provide Buyers with the new HHDA form are those who meet all 3 of the following requirements (referred to herein as “Obligated Sellers”):
- The Seller must complete a Transfer Disclosure Statement (“TDS”);
- The Property was built before 2010 (when building codes were changed to help fire-harden a home); and
- The Property is located in a high or very high fire hazard severity zone (as determined by a Natural Hazards Disclosure report).
If any of the above requirements are not true, the Seller does not complete or sign the HHDA form.
III. What is Required to be Disclosed?
The new law requires Obligated Sellers to provide a statutory notice to Buyers about the threat that the home will be damaged by wildfires because it is in a high or very high severity fire hazard zone and that, because of its date of construction, it may not have the current home fire hardening features.
In addition to providing the statutory notice, Obligated Sellers must disclose their awareness of existing property features that may increase the risk of fire. Obligated Sellers must also disclose if they have received a home fire hardening final inspection report.
IV. What is the Best Way to Use the New Home Fire Hardening Disclosure and Advisory form?
Commencing January 1, 2021, the best practice is to have Obligated Sellers provide Buyers with the completed and signed Home Fire Hardening Disclosure and Advisory form at the same time as the TDS. However, for some transactions that will close escrow after January 1, 2021, it is likely that the Buyers will have already received the TDS before the new form is even available. In those transactions, the Sellers should complete and sign the new HHDA form as soon as possible and then promptly provide it to the Buyers.
Since the HHDA form is not part of the TDS, there is an argument that providing the HHDA later than the TDS does not create a new right for the Buyer to rescind or cancel. Unfortunately, this is merely an argument since there is no established law on the effect of delivering the HHDA after the TDS. Therefore, to avoid any possible claim that the Buyer may have a new right to cancel, the HHDA form should be delivered at the same time that the TDS is delivered to the Buyer.
The HHDA form asks if the Seller is aware of six (6) specific property features that may increase the likelihood of fire damage. If the Seller is aware of the existence of any or all of those features, the Seller checks the appropriate box(es). If the Seller is not aware of the existence of any or all of those features, the Seller does not check the box(es). If the Seller does not know, one way or the other, if the features exist, then the Seller is “not aware” and does not check the box(es).
Obligated Sellers must also disclose their awareness of a final home fire hardening inspection report. Since there are not many of these reports, it is highly probable that this portion of the form will be left blank.
If the Obligated Sellers do not check any of the boxes on the new HHDA form and then leave the section about a final inspection report blank, that fact will not mean that their form is incomplete or needs to be redone, it just means the Sellers are not aware these issues.
V. How to Best Help Clients?
Because the topic of home fire hardening is not well known by many consumers, it may be difficult for Sellers and Buyers to understand the terminology used in the Home Fire Hardening Disclosure and Advisory form. The best way for Agents to help their clients understand these new disclosures is to use the pamphlet created by CalFire entitled “How to Make Your Home Fire Safe” which can be obtained online at www.fire.ca.gov
PRACTICE TIPS:
- Obligated Sellers should be asked to complete, date and sign the new Home Fire Hardening Disclosure and Advisory form at the same time as the TDS and both forms should be delivered to Buyers at the same time.
- The absence of any Seller information on the new HHDA form only means that the Obligated Seller is not aware of the existence of any of the listed features and the existence of a final inspection report.
- To help Clients better understand the contents of the HHDA form, Agents should either provide the CalFire pamphlet to their Clients with the form or encourage their clients to review the state pamphlet online.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their Agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
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