Agoura Horse Property - Custom & Equestrian Real Estate by Nona Green

 
Tuesday, February 24, 2015

A Termite Walks Into a Bar

The termite asks, "Is the bar tender here?" Sorry, termites are no joke. The California Association of Realtors (CAR) rolled out a new Residential Purchase Agreement (RPA) for 2015. The primary change to the old contract is the deletion of the wood destroying pest inspection clause. The old contract guided negotiations between a buyer and seller as to who provided the inspection report, and who was responsible for the cost of repairs.

Realtors asked, "What's so special about termites and dry rot, the most common wood destroying organisms? Why not include a provision in the purchase contract to handle roof defects, electrical problems, or problems with toilets?" The point of taking out the termite clause was that termite repairs should be negotiated between buyers and sellers no differently than other home repairs.

Years ago, the CAR purchase contract included language that the seller warrants everything from soup to nuts. That language is still present in some contracts and used in other states. The CAR found the risk to a seller signing such an agreement unacceptable. Now, the standard agreement states that the property is sold AS-IS. This latest change to the RPA goes further and removes that last boilerplate vestige of Realtors' influence over repair negotiations.

Common convention surrounding termite and dry-rot may not be so easy to change. Even with the contract change, consumers will still be vigilant when it comes to sniffing out termites. The Veteran's Administration and many other lenders still require a clear termite report before they will make

loans. Termites are prevalent in Southern California, and because the cost to treat an infested home can be great, many buyers will still ask the seller to pick up the tab. Because reports from one pest control inspector to another can vary significantly, it makes sense for a seller to obtain an inspection report prior to dealing with a buyer. This way, a seller has control over which pest control operator performs the inspection, and he or she can handle repairs in the most economical manner.

Pest control operators are obligated to file their reports with the State Pest Control Board, and sellers need to provide any reports in their possession to a prospective buyer. The Catch-22 for a seller who suspects that their home has major termite damage is that having a report becomes a disclosure requirement, even if the buyer may not have bothered to order an inspection. Every home and every situation are different, yet as a rule, it makes sense for a seller to be one step ahead of a buyer.

Because the RPA omits the termite clause, there is even more responsibility for a Realtor to insist a buyer obtain a termite report. Just as a Realtor advises a buyer to have a professional home inspection, they will want to advise a buyer to have a termite report. Good advice for a seller: 1) Have a termite report and optionally a completion notice handy. 2) State the limits of the seller's responsibility up front as part of the response to an offer.

Please send questions or comments about this article to Nona@agourahorseproperty.com

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Tuesday, February 10, 2015
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Lately, fire season in Southern California is non-stop. Since the drought began, we have exposure all year long. Summer's end, and the beginning of the new year when the Santa Ana's blow, are times when fire danger is particularly high.

Living in a neighborhood surrounded by nature and brush is obviously much more hazardous than city dwelling. Even if insurance is not on the mind of a homeowner who lives in the Santa Monica Mountains, when that homeowner decides to sell, their Realtor should prepare options for the buyer's coverage. The drought has some insurance carriers phasing out of California. The carrier that holds the existing policy may decline to renew that same policy for the next owner.

Fortunately, there are many alternatives. California FAIR Plan (FAIR = Fair Access to Insurance Requirements) is one option; this is a State run carrier that insures for fire, wind and vandalism. The FAIR Plan will cover the dwelling, separate structures, personal property, loss of use and building code upgrades. The FAIR Plan limits coverage to an aggregate 1.5 million. A companion policy called a DIC (Difference In Conditions) policy covers gaps in the FAIR Plan policy such as theft, liability, and broken interior water pipes. For many homeowners the 1.5 million aggregate coverage that the FAIR Plan covers isn’t enough. In that case, there are carriers that will still write a traditional, albeit expensive, policy on a home located in a brush area.

It’s important to talk with an agent who has experience with brush area coverage and knows which carriers will be a good fit. For an older home, due to building code changes, there are increased costs to rebuild - an endorsement will cover the increase. Loss of use is another coverage to consider - this pays for the cost of temporary housing while a home is being rebuilt. Rural communities have large lots where accessory structures are found. Rebuild costs can exceed standard coverage limits if multiple structures are lost at the same time. An increase in coverage adds a layer of safety for a property with a barn and guest house, for instance.

There are many moving parts to a home policy. Bart Baker, a multi-line insurance agent who specializes writing policies in brush areas, has a great checklist for anyone wanting to evaluate proper coverage. See it by clicking here, or emailbart@bwbaker.com.

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