BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
QUESTIONS AND ANSWERS FROM SPRING RISK MANAGEMENT WEBINAR
Broker Risk Management (“BRM”) held its Spring Risk Management webinar for its clients on May 4, 2026. The following were questions and answers arising out of that webinar:
QUESTION NO. 1: Please repeat the three statements we should make when repeating information provided by a third party.
ANSWER: When an agent is repeating information received from a third party, such as a seller, neighbor, other agent, or third-party source, whether verbally or in writing, that agent needs to ensure that the recipient of the information understands that the information did not come from the agent, the agent is not guaranteeing or warrantying information, that the agent has not verified the information and the buyer is to investigate. We refer to these three steps as 1) Attribute; 2) Disclose and 3) Disclaim. Therefore, the three-part response should be, “_______ [identify person] reports that _________________ [state fact or disclosure]. Agent has not verified the information. Buyer to investigate it.” For example, if a seller advises the listing agent that the seller has permits for the improvement, the listing agent would advise the buyer as to the following: “Seller reports that seller has permits for the seller’s improvements. Listing agent has not verified that information. The buyer should investigate that information to buyer’s satisfaction.”
This advice is derivative of an Appellate Court case decided several years ago entitled Salahudtin v. Valley of California, Inc. (1994) 24 Cal.App.4th 555. In that case, the buyer’s agent saw on the Multiple Listing Service that the listing agent had reported that the property was one acre. The local jurisdiction allowed properties to be split into minimum one-half acre lots. Therefore, the buyer’s agent told the buyer that the buyer could split the lot in half because it was more than one acre. The agent did not tell the buyer where the agent had received the information nor did the agent verify the information. In reliance on the buyer’s agent’s representation, the buyer bought the property. The buyer intended to split the property in half, giving each of his two children one-half. Buyer subsequently learned that the statement was incorrect and that the property was less than one acre and therefore could not be split. The buyer sued the agent. The listing agent took the position that the agent was merely repeating the information the agent had seen in the Multiple Listing Service and obtained from the listing agent. The appellate court held that the statement was legally attributed to the buyer’s agent and was held responsible for it, because the buyer’s agent did not qualify the statement by identifying the source of the information (where it came from), that the buyer’s agent had not verified the information nor did the buyer’s agent recommend that the buyer investigate the issue before making that statement to the buyer.
QUESTION NO. 2: What are the CAR documents that relate to homeowners’ association documents?
ANSWER: California Association of Realtors offers the following forms through zipForms that relate to HOAs: The most important are the “Request for Required Homeowner Association Statutory Documents” (HOA-RS) and the “Request for Non-Statutory Homeowner Association Documents” (HOA-RN). These two contain checklists of all statutory (HOA-RS) and non-statutory (HOA-NR) documents that seller of an HOA unit must deliver to a buyer. In addition, is the “Buyer Homeowner Association Advisory” (BHAA) which contains helpful information on buyers to understand the importance of the documents they are receiving and what they relate to. The final form is the “Homeowner Association Information Request” (HOA-IR) which was created to be a form to use for sellers to request required documents from the HOA. In practice, this form is not widely used since HOAs tend to use their own forms.
QUESTION NO. 3: What company did you reference to review HOA records for buyer?
ANSWER: We are aware of only one company that thoroughly reviews HOA documents that, based on reports from agents’ buyer clients, we can recommend:
Community Association DataSource
331 Piercy Road
San Jose, CA 95138
(408) 687-6850
QUESTION NO. 4: What are the implications of the existence of a septic system if it has not been taken out but the property has been connected to public sanitation? Does that issue need to be disclosed, and if so, how?
ANSWER: If a septic system exists at a property, even if a property has subsequently been connected to public sanitation, the existence of that septic system should be disclosed. A septic system generally involves an underground tank, panel, and a leach field. The existence of this system without removing it could impact on the buyer’s future use. Moreover, if the system falls into disrepair and leaks, it could be problematic for the new owner. Therefore, the existence of an old septic system, including the location, should be disclosed.
QUESTION NO. 5: Do underground storage tanks need to be disclosed? If they are disclosed, how does a buyer’s agent recommend that the buyer handle them?
ANSWER: Yes, the existence of underground storage tanks absolutely must be disclosed. It is extremely important to disclose that information if those tanks contained gasoline or other petroleum products, which could leak and lead to an environmental issue. If an underground storage tank is identified, agents should advise the buyers of the risk and that the buyers should retain an environmental consultant to thoroughly investigate the issue. In some cities and counties have requirements that once such a tank is identified it must either be removed or closed in place, with substantial fines for failure to do so.
QUESTION NO. 6: Is there a time frame for disclosing a murder at a property?
ANSWER: No. If a murder, notorious crime or death took place at a property, BRM recommends that it should be disclosed, no matter how long ago it occurred.
QUESTION NO. 7: Should the Disclosure Information Advisory (“DIA”) be disclosed in a probate case?
ANSWER: Yes, the DIA contains a discussion of properties exempt from the TDS.
QUESTION NO. 8: What is the difference between a mobile home and a tiny home on wheels?
ANSWER: A mobile home, which is now called a manufactured home is generally, but not required to be, placed on a foundation. A tiny house is not. A mobile home is governed by the California Department of Housing and Community Development (“HCD”), whereas tiny houses if on wheels are governed by the Department of Motor Vehicles.
QUESTION NO. 9: How does a listing agent present or handle permits the seller has provided the listing agent?
ANSWER: The listing agent should provide permits to a buyer with a statement that the permits have been provided by the seller and that the listing agent has not verified whether they are complete and that the buyer should investigate the status of all permits, or lack thereof, on the property.
QUESTION NO. 10: If clients are using AI to review disclosures, how would you recommend we advise those buyers?
ANSWER: If a buyer tells you that they are using AI to review disclosures, you should advise the buyers in writing that you strongly recommend that the buyers read the disclosures carefully and that they do not rely on AI as AI may not be reliable nor accurate. You may also want to send the buyers another copy of the Buyer Advisory (“BA”)
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