AVID Disclosures Newsletter
AVID (AGENT VISUAL INSPECTION DISCLOSURE) TIPS
1. RESIDENTIAL PROPERTIES: The AVID is required for all residential properties consisting of 1-4 dwellings. If a Property is mixed use, such as a commercial property with a home in the back, then the AVID is required for the “Residential” portion only.
2. INSPECTION OBLIGATION: An agent has a duty to conduct a reasonably competent “visual” inspection of each “Residential” property and disclose any “defects” that affect:
a. Market value or
Think “Red Flag”, which are conditions indicating a potential defect (see examples below).
3. SCOPE OF INSPECTION: The agent’s “visual” inspection should include inspection of the following areas:
a. INSIDE: inspect all rooms, guest houses and garages.
b. OUTSIDE: inspect yard, fences, landscaping, missing tiles, stucco and driveways.
c. NEIGHBORHOOD: inspect for nuisances, aircraft/train noise, smells.
USE ALL OF YOUR SENSES:
a. Eyes: Report what you see.
b. Ears: Report what you hear.
c. Nose: Report what you smell.
The inspection begins from the moment you pull up to the property.
4. RED FLAGS: Defects that the agent is obligated to disclose are often referred to as Red Flags. Standard of care requires disclosure of anything that would bother you if you were the buyer. It is a good rule of thumb that if you are considering calling me, then the condition is obviously bothering you and you should disclose. The following are examples of AVID disclosures:
– leaks (active) – interior/exterior stains – teenage band on block
– missing roof tiles – abnormal smells inside/outside – noisy dogs next door
– low water pressure – interior/exterior strange smells – aircraft/train noise
– leaning walls – overgrown landscaping – any abnormalities
– concrete cracks (generally over 1/4″ wide).
– agent’s knowledge of prior insurance claim (5 years or newer).
5. AVID: Agent Visual Inspection Disclosure – Required for all “Residential” transactions.
a. Complete the entire form as to all rooms.
– If a room has nothing wrong, then state “NOTHING NOTED.”
b. Only report your observations: only what you see, hear or smell.
– Mold: report “black substance.” Algae: report “green substance.”
c. Do not use adjectives or make conclusions
– Do not say “small stain” or “insignificant crack” or “minimal leak.”
d. Disclose INACCESSIBLE areas of the property.
– boxes in 3′ bedroom prevents inspection
– furniture against south wall in dining room prevents inspection
– large throw rug over wood floor in living room prevents inspection
– boxes in garage prevents inspection
– large painting on south wall in dining room prevents inspection.
e. Make no representations about permits, zoning or code compliance.
f. Avoid unverified factual representation.
6. AMENDED DISCLOSURES: If seller discovers and/or discloses a defect after removal of buyer’s contingencies, then buyer has FIVE (5) DAYS to cancel based upon that late disclosure (See RPA 14B(3)).
Example. You represent a seller in a pending transaction with a 30 day escrow. Five days prior to close, you visit your seller at the property and see a black stain behind a large painting that seller just removed in preparation for close. You now must send an “amendment” to the AVID disclosing the new Red Flag condition. Buyer now has five extra days to cancel meaning that buyer can theoretically cancel on the closing date and get his/her deposit back.
7. FIDUCIARY DUTIES: If your client expresses purchase criteria, then you owe a duty to (1) advise client in writing that seller’s information and disclosure could be wrong and (2) advise client in writing to confirm that information to him/herself is accurate prior to removing contingencies.
– Salahutdin Case. client tells you they need at least 1 acre that can be subdivided. Even though the MILS and seller state that the property is over 1 acre, you need to advise client that (1) seller’s information could be wrong and (2) to confirm the information with the city or county prior to removing contingencies.
– Fields Case. if buyer asks you questions about title report (easements) and whether or not the location of easement prevent him from building a pool in the backyard, you need to advise buyer in writing to confirm the existence and/or location of easements with the title officer him/herself prior to removing contingencies.
Follow these relatively simple guidelines and you will minimize your exposure.