3 Hour CE Class

1. P R E S E N T S
Minimize Your RiskMinimize Your Risk
Maximize Your EarningsMaximize Your Earnings
Understanding and Recognizing
the Top 10 Property Conditions
that most often lead to disputes in the
Real Estate transaction
*According to the NAR Legal Scan/Legal Pulse

2. …and a great class!
Continuing Education Providers
are subject to audit by the State of Connecticut
Please:
Mute your cell phone
Use electronic devices judiciously
Remain in attendance until the
end of the class (or we can’t issue
your credits)
Thank you!

3. Your Credits….
Are submitted electronically to the State of Connecticut
by Tiger Real Estate School
Tiger Real Estate School will email you a
Certificate of Completion within 14 days
Please make sure we don’t land in “spam” and be sure
to save your Certificate where you can find it
There is a $25.00 fee to reissue a Certificate

4. What is the
NAR Legal Scan and
Legal Pulse?
 Legal Scan Published every two years by
National Association of Realtors
(last edition 2013)
Replaced by Legal Pulse – published
quarterly

5. What is the
NAR Legal Pulse?
The Legal Pulse is a quarterly newsletter that analyzes trends
in the previous quarter that impact real estate professionals
The newsletter tracks both cases and statutes
The Legal Pulse tracks when real estate professionals are
being held liable
It also identifies emerging issues and trends, helping to reveal
where additional training is needed

6. Find the full report…
NAR website
Law, ethics, policy tab
http://www.realtor.org/publications/legal-pulse
(Most recent release 1-10-17 covers 3Q of
2016)

7. Caveat Emptor
The doctrine of “Buyer Beware” is gone….
Replaced by Agent Beware!Replaced by Agent Beware!
Realtors are held to a higher standard
“What do you know about the property” has been
replaced by “What should you know about the
property!”

8. Property Condition Disclosure
PCD is/will be an ongoing source of
disputes
PCD ranked as the number 2 most
important issue of concern
Disputes are likely to increase over next
two years
Significant need for training

9. 2015 Legal Issues
by Major Topic
____________________________________________________________
Topic Cases
Agency 74
Property Condition Disclosure 49
RESPA 40
Fair Housing 32

10. Property Condition Disclosure Issues

11. Short Sales, “As Is”,
Foreclosures…oh, my!
Adverse Property Conditions very
common in “as is,” short sales and
foreclosures
Complex transactions
Significant need for training

12. Case Study
Are there
limitations in an
“As Is”
transaction?

13. The Case….
The property is sold “As Is”
Property Disclosure Report states there is
hardwood flooring beneath carpeting
Buyer moves into house
Buyer discovers there is water damaged
plywood, not hardwood, beneath carpeting
 Buyer sues seller for negligent
misrepresentation

14. The Seller Claims…
Caveat Emptor
The house was sold “As Is” – it’s the buyers
responsibility to inspect the premises
The buyer should have pulled back carpet and
investigated drainage issues
“As Is” means “As Is” (so leave me alone)

15. The Trial…
The Buyer chose NOT to have a home inspection
The Buyer relied on the representations in the
Property Disclosures
Evidence reveals the Seller was aware of water
damage and plywood subfloor
Buyer acknowledges it was an “As Is” purchase

16. Questions…
 Did the Buyer adequately inspect the premises?
 If you were the Buyer’s Agent, what advice would
you give him/her?
 If you were representing the Seller, what advice
would you give?
 What would you do if the Seller asked you to
complete the Disclosure Documents for him?
 Does “As Is” get the Seller off the hook?

17. The Verdict…
The Court held that an “As Is” disclaimer in a
Purchase and Sale Agreement would negate a
negligent misrepresentation claim against a seller
only if the buyer had knowledge of the alleged
defect
The buyer was totally unaware of the plywood
subfloor and water damage and relied on the
representations in the Disclosure Documents
The seller was ordered to reimburse buyer for cost
of hardwood floor and repair of entire properties
drainage system

18. FACT:FACT:
80% of claims against
brokers E&O insurance
are due to property
related conditions
Effective disclosure helps you earn more and
keep more commissions

19. Today’s AgendaToday’s Agenda
• Help you develop an awareness of what to
look for (without turning you into home
inspectors)
• Highlight warning signs of possible defects
• Overview of Top 10 Property Conditions that
most often result in disputes
• Common sense rules of disclosure

20. Let’s test your “observation skills”

21. Why is this information important?
Happy, well informed clients, mean more
referrals (and no disputes)
More referrals = more earnings
Minimize your risk by having a greater
awareness and understanding of adverse
conditions

22. FACTS…
According to the 2016
National Association of Realtors
Profile of Buyers and
Sellers

23. FACT:
59% of New Buyers rely upon their Agent to point out
unnoticed features/faults with the property
53% of Repeat Buyers rely upon their Agent to point
out unnoticed features/faults with the property
(This ranks as #2 benefit)
#1 benefit is to help buyer understand the process
Source: 2016 NAR Profile of Buyers and Sellers

24. FACT:
92% of homes sold in the
Northeast used an Agent or
Broker (+2% from 2015)
YOU ROCK!!
Source: NAR Profile of Buyers and Sellers

25. Help buyer understand the process 80% 51%
Point out unnoticed features/faults with property 59% 53%
Negotiate better sales contract terms 49% 46%
Provide a better list of service providers (e.g. home
inspector)
39% 38%
Negotiate a better price 39% 35%
Top 5 benefits your
buyer clients want
New Previous
Buyer Buyer

26. In Summary:
Protect Yourself And Your Client
By Understanding Their
Expectations and Having a
Greater AWARENESSAWARENESS Of
Adverse Conditions

27. Lovely House

28. Nice Landscaping Job

29. Great Grading

30. Do You See the Problem?

31. Interior View

32. Termites, Mold, Damage

33. Property Conditions
1. Water, Mold, Water
Intrusion
2. Structural Defects
3. Floors/Walls
4. Sewer/Septic
5. Insects/Vermin
6. Plumbing
7. Roof
8. Environmental Issues
– Radon, Asbestos,
Lead, UST
9. HVAC
10. Electrical

34. Mold/Water Intrusion#1

35. Moisture & food source create
mold
Leaking roofs, plumbing problems,
humidifiers, damp/wet basements,
improperly vented appliances and fans, etc
Combine with a food source such as wood,
wallboard, or wallpaper to cause the growth
of mold
Spores are released and inhaled

36. Mold & Water Intrusion
What’s the problem?

37. Crawlspaces

38. Floor
Attic
Subfloor

39. Mold & Water Intrusion
Is this a problem?

40. Damage to Systems

41. Mold & Water Intrusion
Nice exterior !
Any cause for
concern?

42. It’s Just A Small Window Leak…

43. How Bad Could It Be?

44. Mold & Water Intrusion

45. Warning Signs of Water Intrusion
Poor grading
Inadequate ventilation
in crawlspace or attic
Cracks in foundation
Efflorescence
Roof stains in attic
Missing roof shingles
Stains on ceilings
Newly painted
foundation/floors
Water stains
baseboard/furniture
legs
Mold
Sump pump
Downspout not
extended
Window rot

46. Mold and Water Intrusion are the
#1 cause of disputes in the Real
Estate Transaction
Develop an awareness of what to look for
Use all of your senses
Scrutinize seller disclosures – ask questions
Defer to professionals – have a home inspection
Q U E S T I O N S ???

47. Structural Defects/Walls & Floors#2 &
#3

48. Walls/Floors

49. Deck Framing & Support Systems

50. Structural Defects
Some defects are obvious….

51. Structural Defects
….and some are not!

52. Structural Defects
A closer look

53. Structural Defects
Do you see any problems?

54. Structural Defects

55. What’s The Defect Here?

56. Warning Signs of Structural Issues
Sloping or sagging
floors
Overly snug fit to floors
and windows
Cracked tile floor
Excessive concrete
cracking and
separation
Alterations without
permits
Sagging beams
Funky
supports/columns
Stair riser/tread size
Crushed sills/joists
Suspicious homeowner
repairs

57. Structural Issues are the #2
& #3 cause of disputes in the
Real Estate Transaction
Develop an awareness of what to look for
Scrutinize seller disclosures – ask questions
Defer to professionals – have a home inspection
QUESTIONS??

58. Are you Ready??
Let’s Play..
CosmeticCosmetic
oror
ConcernConcernMAKE

59. Here’s how it works:
Name the Defect
Determine the significance – bear in mind cost to
remediate/repair and impact upon structure and
other components
Is the defect Cosmetic? Costs less than $500
and has no impact upon structure
Is the defect a Concern? Costly repair,
implicates other components/structure

60. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

61. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

62. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

63. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

64. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

65. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

66. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

67. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

68. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

69. Name that
Defect!!
Is it
Cosmetic or
Is it a
Concern??

70. Septic/Sewer#4

71. Sewer & Septic
Where does the water go?
Where does this water go?

72. Sewer & Septic
Backwash?

73. Sewer & Septic
Laundry & water discharge?

74. Warning Signs of Septic/Sewer Issues
Slow sink drains
Toilet flush fills, then drains
Odor in yard – septic breakout
Internal odors
Washing machine (grey water) drained to outside

75. Insects/Vermin#5

76. Bats & Birds Nesting in Attic

77. Carpenter Bee Stains, Holes, & Damage

78. Powder Post Beetle Damage

79. Termite Mud Tubes & Damage in Wood

80. Welcome to the
People’s Court

81. Part 1 – The People’s Court

82. B R E A KB R E A K
15 MINUTE15 MINUTE

83. 2016 – 2018
(3) Credit Continuing Education Courses
 Don’t Let Water Intrusion Sink Your Deal!
 Smart Energy Updates for Existing Homes
 Innovation in Sustainable Housing – Green Building Best Practices
This Old Connecticut House
 Minimize Your Risk, Maximize Your Earnings
 Environmental Issues – Evolution to Resolution
 What to Expect When We’re Inspecting!
 Mold to Sold!
 Residential Building Practices

84. The Verdict

85. Warning Signs of Insect Damage
• Termites:
 Mud tubes
 Damaged wood
 Soft spots or blisters
on drywall
Carpenter Ants:
 Frass
 Smooth channels along
wood grain
 Damaged wood
Powder Post Beetles
 Frass
 Small circular/oval holes
 Meandering holes
through wood
Carpenter Bees
 Staining
 Bees hover around
eaves, deck, fence
 Round holes

86. Plumbing#6

87. Plumbing
Anything
unusual?

88. Some Things Are Readily Apparent

89. Some Not So Obvious

90. Missing or Uncommon Traps

91. Exterior Vent Pipe

92. Settled Slab
Check Valve

93. Plumbing
The latest in designer plumbing!

94. Warning Signs of Plumbing Issues
Loose and missing
grout and tiles
Loose toilet
Safety glass at tub or
shower enclosures
Water odors (sulfate)
Aged piping
Leaking drain traps
Reduced water pressure

95. Roof#7

96. Worn roof with tar Tilo Hurricane Shingles
Aged Roofing Materials

97. 10 Year Old Roof

98. Roof Framing
See any hint of a problem?

99. Roof transition Exposed Flashing
Roof Flashing

100. Roof Accessories (Think Bling!)

101. Aged Low Pitch Roofing

102. Rubber Roofing Products

103. Defective Asphalt Shingles

104. Wood Roofing Products

105. Slate Roofing

106. Warning Signs of Roof Issues
Age of Roof
Rusted Flashing
Missing, cupped or curled shingles
Stained ceilings
Cracked or missing tiles
Buckets in the attic

107. Winter – ICE DAMS!!!!

108. Your Opinion Matters….
Before the end of
class, please take a
moment to complete
our evaluation form…

109. Environmental Issues
Radon (in air and water)
Asbestos
Lead
Underground Storage Tanks
#8

110. What is Radon?
Radon is a gas
It is inert (inactive)
It has a life
expectancy

111. Radon Measurement Units
Average indoor radon is 1.3 pCi/L
Average outdoor radon is 0.4 pCi/L
U.S EPA action level is 4.0 pCi/L

112. Radon in Well Water
Radon in well water can
increase levels of radon
gas in the home
Radon is released into
the air as water flows
Household activities can
release large amounts
of radon into the home

113. Radon in water is expressed in
picocuries
Average concentration of radon <1,000 pCi/L
Levels in groundwater have been found above
1,000,000 pCi/L
Highest amounts have been found in the
Northeast
Private wells tested in Connecticut indicate an
average radon level of about 3,000 pCi/L

114. What Is Asbestos?
Mineral fiber used in
over 3,000 products.
Requires a special
type of microscope for
identification
Used to strengthen, to
provide heat insulation
and fire resistance
Friable or non-friable.

115. Asbestos
The mere presence of asbestos in a home or
building is not hazardous
Damaged asbestos may release asbestos fibers and
become a health hazard - friable
Asbestos material in good condition is not a health
issue, if left alone – non-friable

116. Lead in Paint
Lead was used as a pigment and
drying agent
• One half of all homes built from 1940 –
1960 contain heavily leaded paint
• Two thirds of homes built pre-1940
contain leaded paint
• 1978 U.S.CPSC lowered max content
to trace amount

118. Warning Signs of Environmental Issues
Radon – lack of disclosure, mitigation system not
functioning
Asbestos – wrapped pipes, loose insulation,
vermiculite, aged floor, 6 x 6 ceiling tile
Lead – 1978 or before
UST – cut off fuel lines, new gas, evidence of prior
oil tank, propane

119. HVAC#9

120. Warning Signs of HVAC Issues
Aged units
No maintenance tags
Odors in house or near unit
Ineffective function – not hot enough, not cold
enough
We’re going to revisit this is our
“Just Serviced….” section.

121. Electrical#10

123. Panel, Condition & Location Problems

124. Warning Signs – Electrical Issues
Outdated Service size
Panel issues
Exposed romex
Open junction boxes
Extensive use of electrical cords
Aluminum wiring
(primarily used from 1965 – 1974)

125. Let’s Play…
“Name thatName that
Defect!!!”Defect!!!”
Are you ready?

126. Name that defect!!

127. Name that defect!!

128. Name that defect!!

129. Name that defect!!

130. Name that defect!!

131. Name that defect!!

132. Name that defect!!

133. Name that defect!!

134. Name that defect!!

135. Name that defect!!

136. Name that defect!!

137. Name that defect!!

138. Just Serviced…

143. Legal Issues- Part II
Other areas of
concern….

144. Seller’s Disclosures…
who the heck is the Seller, anyway?
“I’m acting as Power of Attorney for the
Seller”
“I’m just the Investor”
“I’m just the Relocation Company”
“I haven’t lived there for years”
Are these valid reasons not to complete the required Property
Disclosure Report?

145. Test your
Property
Condition
Disclosure
Statute I.Q.
(CGS 20-327b)

146. Who is required to complete the Property
Disclosure Report?
 Is the Report State-created or Federally-
created?
How many questions are asked in the
document?

147. Are there any Statutory
Exemptions to the requirement of
completing the Property
Disclosure Report?
If so, what are they?

148. There are several exemptions..
Transfer of one or more co-owners solely to one or
more of his co-owners
Transfers made to spouse, child, parent, sibling,
grandparent or grandchild where no consideration is
paid
Transfers pursuant to a court order
Transfers of newly construction residential real
property covered by a one year warranty
Transfers made by executors, administrators,
trustees or conservators

149. Exemptions…
Transfers made by the Federal Government or any
government chartered corporation (such as FHA,
FDIC)
Transfers by Deed in lieu of Foreclosure
Transfers by the State of Connecticut or any political
subdivision thereof
Transfer of property acquired through foreclosure or
deed in lieu of foreclosure

150. Additional areas of concern….
Misstatement of square footage
Imported Drywall
Boundaries
Zoning
Valuation
Off-Site Adverse Conditions
Stigmatized Property

151. Best Practices…
Make sure your client understands his/her obligations
under the contract
Explain that he/she has a right to bring in specialists to
investigate the condition of the property
Do not give advice beyond your area of expertise
Point out potential trouble spots and recommend a
Home Inspection
Review Seller’s disclosure and ask for more
information if necessary
Document everything in writing

152. Minimize Your Risk
Make sure the Inspection Companies that you
recommend have:
Errors & Omissions Insurance
Are fully licensed in Ct and strictly adhere to the
Standard of Practice
Stand behind their inspections

153. Thank you!
Questions??
?

154. Thank You!!