QUESTION: We represent the Buyer and we received a Residential Earthquake Risk Disclosure Statement. It looks somewhat like the Residential Earthquake Hazards Report. What is this new form and do we need to start using it?
ANSWER: Yes, you need to start using it. Effective July 1, 2020, the Residential Earthquake Risk Disclosure Statement (sample attached following this Tip) replaces the old Residential Earthquake Hazards Report that Sellers are legally obligated to complete if the Property was built before 1960. The newly-revised form is contained in the 2020 Edition of the Homeowner’s Guide to Earthquake Safety (which replaces the old 2005 pamphlet). The Earthquake Guide had to be revised because the fault line and other maps depicted had been revised.
The Earthquake Guide not only explains the inevitability of earthquakes in California, it provides information about: (1) the most common earthquake-related hazards that can damage homes; (2) how to find and then fix the potential structural risks in a home; and (3) where to obtain additional information about earthquake safety. Since the Earthquake Guide contains information about the structural integrity of homes, it is an invaluable tool for all Buyers.
Under Civil Code Section 2079.8, if the Earthquake pamphlet is delivered to a Buyer, then neither the Seller nor the real estate Agents are obligated to provide:
“additional information concerning, and the information shall be deemed to be adequate to inform the [Buyer] regarding, geologic and seismic hazards, in general, as described in the guide, that may affect real property and mitigating measures that the [Buyer] or seller might consider.”
Sellers and real estate licensees must still disclose known hazards on or affecting the Property but delivering the pamphlet to the Buyer greatly limits the Seller’s and Agent’s liability for unknown geologic and seismic hazards. Thus, regardless of the age of the Property, all Buyers of all residential real estate of 1-4 units should receive this pamphlet. It should also be delivered to all Tenants of residential property.
Under California law, if the Property was built before 1960, the Seller must disclose known earthquake risks to Buyers using the form created by the California Seismic Safety Commission. The Seller’s obligations are explained on page 12 of the Earthquake Guide and the new Residential Earthquake Risk Disclosure Statement is contained on page 13 of the official book but may be located elsewhere depending upon who has printed up the pamphlet.
The old Residential Earthquake Hazards Report contained questions that could confuse Sellers and Buyers. Even though the form cross-referenced the questions to specific pages in the Earthquake Guide, too often Sellers merely stated that they “Don’t Know.” The questions in the new Residential Earthquake Risk Disclosure Statement are better written and should elicit better responses from Sellers.
Sellers should not be asked to complete the Residential Earthquake Risk Disclosure Statement if: (1) the Property was built on or after January 1, 1960; (2) the Seller is exempt from completing the TDS and NHDS statement; and/or (3) the Seller does not have the Earthquake Guide available as a reference to respond correctly to the questions.
One portion of the old Residential Earthquake Hazards Report was reorganized, presumably to get Seller’s attention about the importance of being as forthcoming as possible with their responses. Directly below the Property information section, the form notes that Sellers need to answer the questions to the best of their knowledge. That instruction paragraph then goes on to warn:
“If any of the questions are answered ‘No,’ your home is likely to have an elevated/disclosable earthquake risk. If you do not have actual knowledge as to whether these risks exist, answer ‘Don’t Know.’ Questions answered ‘Don’t Know’ may indicate a need for further evaluation.
This instructional statement may alarm Sellers who may be concerned about making mistakes in answering the questions. Agents should not be telling Sellers how to answer any of the questions on this form. Although the Seller is advised on page 12 that they are not required to hire an inspector to determine the answer to any question, the Seller should be told that that is an option. Otherwise, the Seller should carefully review the information in the pamphlet and if the Seller still does not know the answer, then the Seller should follow the recommendations made in the Earthquake Guide as quoted above; state “Don’t Know.”
PRACTICE TIPS:
- Regardless of the age of the Property and regardless of who your brokerage represents, after July 1st, all Buyers should receive the 2020 Edition of the Homeowner’s Guide to Earthquake Safety. If a Buyer is in escrow and has already received the earlier edition of the Earthquake Guide, it is not necessary to send the new pamphlet.
- Regardless of who your brokerage represents, the broker file should contain proof that the Earthquake Guide and all other state pamphlets were delivered to the Buyer.
See Weekly Practice Tip: Providing Links v. Providing State Pamphlets (9/8/2017)
- If the Property was built before 1960, unless exempt, the Seller must fully answer all of the questions on the new Residential Earthquake Risk Disclosure Statement and, to do that properly, the Seller must have the Homeowner’s Guide to Earthquake Safety.
- Buyer’s Agents should encourage Buyers to carefully review the state pamphlets since they contain significant, relevant information that homeowners should know about.
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.
SAMPLE RESIDENTIAL
EARTHQUAKE RISK DISCLOSURE STATEMENT
