BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Broker Risk Management (“BRM”) held a webinar on July 14, 2025 entitled “Back to Basics – Inspections and Disclosures.” During that webinar, a number of questions were asked which we did not have time to answer. The following contains relevant questions and answers:
QUESTION: We are representing a seller. Should we ask the buyer’s agent for a copy of the buyer inspection election (BIE) or buyer inspection waiver (BIW) forms? They may prove useful to the seller in defending the issue down the road. Does the buyer have an obligation to provide us with these forms?
ANSWER: A buyer does not have an obligation to provide the signed BIE or BIW to the seller. If an agent is representing a buyer, these signed forms should not be provided to the seller since these forms were created for buyer’s agents to document their discussions with their buyer regarding electing to or waiving inspections. However, if the agent is representing the seller, there is no harm to the seller in requesting these forms. While the forms may be helpful to the seller, there is no benefit to the buyer in providing these forms.
QUESTION: Should agents include repairs of which they are aware on the AVID?
ANSWER: Yes. If a seller has made a repair to the property, it could be an indication of a defect and that repair should be noted by the listing agent on the AVID. In addition, if an agent representing a buyer notes such repair, the agent should recommend to the buyer that the buyer have the item inspected.
QUESTION: How would you describe a crack or stain if you have painted over it?
ANSWER: It is recommended that a photograph be taken of the crack or stain and attached to the AVID prior to the crack being painted over. Another alternative is to disclose it as follows: “Crack existed in [add location], but was subsequently painted over. Buyer should investigate the issue.”
QUESTION: If there are co-listing agents, do both need to complete an AVID?
ANSWER: If there are co-listing agents from different brokerages, it is recommended that each agent prepare an AVID. Alternatively, one AVID can be prepared, but both agents should review it, add each agent’s observations, and both should sign it.
QUESTION: Is it okay to say “See Disclosures,” when filling out the AVID?
ANSWER: No. The AVID is for agents to disclose all material defects of which an agent observes during an inspection of the property. Agents should also add any information regarding the property of which the agent is aware.
QUESTION: How do you disclose known defects that have been repaired?
ANSWER: You identify the issue and disclose that it has been repaired. For example, if a seller has told you about a roof leak but that the seller repaired it, a listing agent should recommend to the seller that the seller disclose it on the seller’s disclosures. In addition, the agent can note on the AVID. For example, “Seller reports that there was a roof leak but seller reports that it has been repaired. Agent has not verified this information. It is recommended that the buyer investigate it.”
QUESTION: How long do brokers need to retain files?
ANSWER: The California Department of Real Estate requires that transaction files be retained for a minimum of three years. However, BRM recommends that files be retained for a minimum of five to seven years. The average incubation period for a claim is three years. A broker’s transaction file is the most important aspect of defending a claim. Therefore, it is important to retain the file in the event that a claim arises.
QUESTION: If I am listing a property which I previously sold, what documents do I need to provide to the buyer?
ANSWER: All documents containing any relevant information which could impact the value or desirability of the property. For example, inspection reports and seller’s disclosure should be provided. It is recommended that agents work with their managers to review prior files to determine what documents should be provided to a buyer.
QUESTION: I previously listed a property with my prior broker. I am now relisting the property with my new broker. Is the prior broker obligated to provide me with the transaction file?
ANSWER: No. However, you are required to disclose information of which you are personally aware or recall, and also disclose to buyers all documents which you have retained in your possession from prior transactions with that broker.
QUESTION: How long are the TDS and SPQ valid?
ANSWER: There is no expiration on sellers’ disclosures. However, the information in sellers’ disclosures should be current and up to date as of the date that they are delivered to a buyer. To assure that that is the case, if an amount of time has passed since the seller has prepared the disclosures, the listing agent should ask the seller to review and update any disclosures that have changed or need to be added. If there are no such changes, seller should be asked to so state and initial and date on those disclosures, or an email to listing agent stating that there are no changes. Those disclosures are always relevant and if an agent has access to sellers’ historical disclosures, those should also be provided to a new buyer.
QUESTION: If a seller completes the disclosures incorrectly, how does the agent address it? Should the agent make the corrections?
ANSWER: An agent should never make corrections on the sellers’ disclosures. Instead, the agent should return the disclosures to the sellers and ask the sellers to make corrections.
QUESTION: Is the DIA still required?
ANSWER: It is not a mandatory form, but it is recommended that the DIA form be given to sellers by the listing agent before sellers complete their disclosures. Also, it is a recommended practice to go through the DIA with the seller so that sellers understand their full disclosure obligations.
QUESTION: Is it acceptable for a seller to complete the TDS and SPQ by DocuSign?
ANSWER: That is not a recommended practice. A recommended practice is that the sellers complete their disclosures in their own handwriting and sign them.
QUESTION: If a TDS is provided with a non-contingent offer and some questions are left unanswered, does the buyer still have a cancellation right?
ANSWER: Likely, yes. A buyer has a right to cancel the transaction three to five days, depending on the form of delivery, of a completed TDS.
QUESTION: What if you live in the neighborhood of a property you have listed and know that a neighbor is loud? Does this information have to be disclosed?
ANSWER: Yes. The law is clear that agents involved in a sale transaction must disclose to buyers all material facts and documents reasonably in their possession which impacts value or desirability of the property.
QUESTION: Please provide an example of a disclaimer.
ANSWER: “Seller reports that a sex offender lives in the neighborhood. Agent has not verified that information. The buyer should investigate it.”
QUESTION: Is a seller obligated to prepare a TDS if the seller did not occupy the property?
ANSWER: Yes, unless the seller is a trustee and falls within that exception (the trust is revocable, the trustee is a live natural person, and the trustee has not previously occupied the property nor was previously on title in their own name).
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is an attorney-client privileged communication 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 LLP. 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 practice.