BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
The Revised Fire Hardening and Defensible Space Disclosure and Addendum – June 2022
The CAR Fire Hardening and Defensible Space Disclosure and Addendum (FHDS) has been revised in the June 2022 CAR forms release. This Tip covers those changes.
I. Background: There has been confusion about how and when to use the new FHDS form because it covers two separate statutory Seller disclosure requirements, and the factors that trigger the need for these two statutory disclosures are also different.
II. No Longer An Advisory: The prior version of the FHDS form was captioned to act as an Advisory. Unfortunately, it was not a particularly good Advisory, and lead to the misunderstanding that the FHDS should be given by a Seller in EVERY transaction, even when Seller was not obligated by law to do so.
III. The Revised FHDS Form
Paragraph 1: Law Applicability Subparagraphs A and B describe the properties for which a Seller must make their disclosure on the FHDS form. (Those criteria are identified separately for the Fire Hardening law and for the Defensible Space law in sections IV and V below.) Subparagraph C identifies where a Seller may look to make the determination if they must make the disclosures required for this form.
Paragraph 2: Fire Hardening Disclosure
A. When Sellers Must Complete the Fire Hardening Disclosure? The Fire Hardening disclosures in paragraph 2B must be completed by Sellers ONLY if all four of these criteria are met:
- The Property is residential (1 to 4 units)
- The Seller is obligated to fully complete a Real Estate Transfer Disclosure Statement.
- The Property is located in a high or very high fire hazard severity zone; AND
- The Property was built before January 1, 2010;
B. What Needs to be Disclosed? Sellers of properties that meet all the above criteria must disclose whether they are aware whether the property has any 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 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.
Paragraph 3: Defensible Space Disclosure and Addendum
A. Which Sellers Must Complete the Defensible Space Disclosure? The Defensible Space disclosures must be completed by Seller Only if paragraphs 1, 2 and 3 in paragraph 2A above apply.
The date the Property was built is not relevant to the Defensible Space disclosure requirement.
B. How to Complete the Defensible Space Disclosure?
For information on completing this paragraph, follow the instructions in the attached CAR form Defensible Space Decision Tree (DSDT)
IV. Potential Buyer Rescission Right: The codes which create these disclosure obligations have the same requirement and exemptions as the TDS. It is therefore arguable that the late delivery of the FHDS may create a 3 or 5-day right for the Buyer to cancel the transaction; and a failure of Seller to deliver a required FHDS could create a continuing right in the Buyer to cancel the transaction until it is delivered.
Because of the potential for a buyer cancellation 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.
PRACTICE TIPS:
1. The FHDS form should ONLY be provided by a Seller to a Buyer when required by law.
2. Do not use the FHDS as an advisory; CAR has a Better Advisory: To provide Buyer with an Advisory regarding potential dangers from wildfires, use the CAR Wildfire Disaster Advisory (WFDA on zipForms)
3. Depending on when the property was built, it is possible that a Seller may be required to complete both paragraphs 2 & 3 or, if the property was built after 2010, just paragraph 3.
4. To determine if a property is in a High or Very High Fire Hazard Severity Zone, start by checking the one-page NHD Statement (with the 2 fire, 2 flood and 2 earthquake check boxes) in the NHD Report. Those two fire zones are the Very High zone and the “Wildlands Area” zone which can be either in a High or Moderate Fire Severity Zone. Therefore,
A. If neither of the Fire Zone boxes are checked, the seller IS NOT required to deliver the FHDS to a buyer.
B. If the Very High Fire Zone, or both Fire Zone boxes are checked, then the Seller IS required to deliver the FHDS to a Buyer.
C. If only the Wildlands Area Zones is checked, then it IS UNCERTAIN if the FHDS form is required.
In this latter case, check with your NHD Report provider and ask them to check their maps and give you a written determination of whether the property is in or out of the High Fire zone.
5. Brokers are not required to determine if a property is located in a particular fire hazard zone. Sellers who remain 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.
6. Additional information on minimum annual vegetation management standards to protect homes from wildfires, along with information about home hardening, may be obtained at www.readyfor wildfire.org.
7. A Buyer cannot order a CalFire inspection of the property without the permission of the Seller. Paragraph 12C of the CAR Residential Purchase Agreement prohibits a Buyer from ordering any
inspection or report by a government employee without Seller’s permission. (There is a similar
provision in Paragraph 16.E of the PRDS contract. The SFAR contract has no similar provision
ATTORNEY-CLIENT PRIVILEGED COMMUNICATION: 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.