Deciphering Property Disclosures: Uncovering Hidden Gems and Nuggets with Kevin+Jonathan!
Disclosure Documents Are a Required Part of a Sale
California’s Civil Code requires sellers to disclose property conditions and material information affirmatively to would-be buyers. What’s a material fact? There’s no bright-line rule as the definition changes under different circumstances but it’s generally understood as a fact that will impact a buyer’s decision to make an offer on a property and what the offer will be. There are standard forms the local REALTOR association and state association produce that most agents use.
If completed properly (and legibly), a set of California disclosure documents can help buyers form a very complete picture of a property and its recent history. While there are other times (such as when a trustee/successor owner who inherits a property) where information is scant. Disclosure documents usually follow a general pattern and are usually hundreds of pages long. The City’s tradition of having disclosure documents ready before property comes to market runs counter to standard practice in most places where there’s more time to investigate a property after a contract is signed. Having disclosures prepared early allows prospective buyers to assess a property before making an offer, which saves a lot of grief and heartache if an issue pops up after you get into contract.
For buyers, the “disclosures” are intended to tell you about the property you’re considering buying. For agents, the number of disclosure packages distributed will tell us what potential competition for the property may be like.
Sellers are expected to provide all the relevant information about their property upfront, before a potential buyer makes an offer. This way, buyers can review all the information about a property and make a fully informed decision before putting in an offer.
For sellers, participating in the pre-sale inspection and disclosure process can reduce the chances of a buyer cancelling a contract after the parties ratify it based on the assumption that the buyer would have weighed and considered disclosure information in their offer price and terms.
This is a win-win situation for both parties as it helps manage risk, sets expectations and encourages transparency and candor that paves the way for contingency-free offers which already price in any deficiencies a seller reveals in those disclosures.
In San Francisco, where the real estate market is notoriously expensive, property disclosures — both getting them and the content which they represent — are important parts of the buying process.
DEEPER INSIGHT
What do we really know anyway?
There is what we know and what we don’t know. Then there’s the stuff that we know we don’t know.
As we say to our own buyers and sellers: there is no such thing as perfect information. Disclosures can only tell you so much. While perfect information is impossible, buyers are entitled to know a lot about the home they are purchasing — it is a big deal.
Disclosure documents are limited no matter how comprehensive for the simple fact that we cannot see through walls nor see the past in a perfect manner. Documentary sources can be incomplete and sources like the neighbor next door telling something you don’t (want?) to know.
Sorting this out is another reason why you need a realtor and why you are here, right?
Is this stuff really important?
Absolutely!
What are the most important things to look at as a buyer?
That is the question, isn’t it? We will discuss.
MARKET INSIGHT
What’s the Count?
An Offer is Only Taken Seriously if the Buyer Has Received and Reviewed the Disclosure Package
Most seller agents in San Francisco (and their sellers by extension) will not consider an offer serious unless and until a buyer and until has reviewed and returned some or all of a standard disclosure package. With the exceptions of pre-emptive or an off-market situations where disclosure documents haven't been completed yet, an offer will only be taken seriously if a buyer has, at the very least, been given a set of disclosure documents to review before submitting an offer.
Having disclosures prepared and distributed to interested buyers allows prospective buyers to assess a property before making an offer and is intended to save people time, any surprises and any subsequent negotiations if something is later discovered. This means a bid should already reflect any adjustments you'd want if you found an issue.
MOST IMPORTANT
PERSON-COMPLETED PROPERTY INFO
Information straight from the agent and seller — like the TDS or San Francisco’s (local) Seller Disclosure document as completed by a real, live person or two. No exceptions. Well, unless the seller is a Probate trust's trustee or it is an REO property.
ALSO IMPORTANT
PROPERTY-SPECIFIC INFORMATION
Information about the property like inspection reports, permit history, title reports and more.
- The Transfer Disclosure Statement and San Francisco Seller Disclosure
Bingo — you’ve hit the supposed jackpot of information about the property. Here, the seller is obligated by state law to disclose what they know about the property. Sellers must provide material facts that a reasonable buyer would want to know and that aren’t readily apparent upon first inspection. *Note: If this is a trust sale (like probate type of trust, not marriage/tax types), there may be limited information, as probate trustees handling the estate are not expected to know much about the property.
Other Seller-Prepared Parts of the Disclosure Package:
•Tenant-Related Information: Details about any previous tenants or income property specifics.
•Earthquake Preparedness: Information on earthquake safety features, such as water heater strapping. These details are typically well-known after renovations or in modern buildings.
•Lead Paint Disclosure: It’s rare to find actual lead testing reports. Most surfaces have been replaced or repainted in the past 40 years. Sellers often state they have no specific knowledge of lead in the home but do not rule out the possibility, given most homes in San Francisco were built before 1978.
•Parking and Storage: Crucial for condo/TIC purchases. Compare what’s in use with what the seller claims and what governing documents like CC&Rs (and condo maps) or a TIC agreement state.
•Square Footage: Includes tax records and MLS records (both provided by the agent). Sellers must now include any past appraisals and architectural plans if they have them.
•Previous Disclosures and Documents: Sellers must include disclosures they received when they bought the property. Omitting or selectively providing these documents can be risky from a liability perspective.
Why This Matters:
These disclosures are designed to give you a complete picture of the property and its history. By reviewing this information thoroughly, you can make a more informed decision and avoid surprises later. This process also ensures transparency and helps manage expectations, making the transaction smoother for both buyers and sellers.
SUPPOSEDLY IMPORTANT
BOILERPLATE + CONSUMER PROTECTION INFORMATION
The bulk of any property disclosure package in San Francisco will be the general advisories, notices and admonishments given to all property buyers in the state and in San Francisco that are still important but not necessarily applicable.
CONTEXT
On Buyer Diligence Generally
A Buyer Knows, or Do They?
An Offer is Only Taken Seriously if the Buyer Has Received (and Reviewed) the Disclosure Package In San Francisco, most seller agents (and their sellers by extension) will not consider an offer serious unless the buyer has reviewed and acknowledged the disclosure package. Exceptions may include pre-emptive or off-market situations where disclosure documents haven’t been completed yet. However, for standard transactions, an offer is only taken seriously if the buyer has, at the very least, been given the disclosure documents to review before submitting their offer.
Hiring Your Own Inspectors
Having Your People Talk to Their People If you wanted to hire your own inspectors While we advise our sellers to hire the very same experienced and reputable inspectors that we recommend to our buyers to prepare presale written reports, you as a buyer may want to get your own opinion and bring your own inspectors to the property. That’s advisable when you think something is awry, you have doubt or just because you want to have a more ‘objective’ point of view. You would have to do this out of pocket (like the good old days) and, if the property is a popular one where multiple offers are expected, you may be well-advised to do that inspection before the offer date.
Measuring Up — Why Square Foot Numbers Vary The Numbers Can Lie
Can you really live in 0 square feet? Why is the total unavailable? Why are tax record figures different?
This is the most common question we get from buyers so you’re not the first to see varying numbers for square footage. Determining square footage in San Francisco can be extremely difficult. Why? First, let’s start with tax records: Tax records in the City are notorious for being unreliable because there are a lot of people who don’t want to trigger a reassessment of their living area for fear that it would move the entire property outside of Prop 13’s bar on raising property taxes by any more than 2% per year. So many people choose not to report construction for this very reason, hence the prevalence of the ‘work-done-without-permits’ mantra we’ve seen so many times. And even if the City does measure newly built living area or remodeled it doesn’t count hallways or closets whereas everyone else in the world does. Tax records are also notoriously wrong when it comes to the input of the data too. Up until recently the Tax Assessor was using a computer database system that was based on the antiquated COBOL computer programming language that was last relevant in 1980.
Practical measurements can be problematic because measurement is in the eye of the beholder: Do you count wall thickness as part of the usable living area or do you subtract them? What’s the usable area for someone who is almost 7 feet tall opposed to someone who is only 5 feet tall in a pitched-roof attic? Also, is the floor area next to a bay window completely usable? You’ll probably get just as many different measurements as there are people measuring. This is why many times we’ll see the square footage listed as zero or blank on the MLS. This does not mean we’re living in a quantum singularity but it means agents are leery enough of the question that they don’t want to even bother with this thorny issue.
In the end, square footage isn’t as relevant in San Francisco as it is elsewhere in the country where the premium comes from the quantity of square feet a home has whereas here it is more where it is located, how it is legally described and how it is used (among more).
DELVING INTO THE DETAILS
What to Look for Onsite and inthe Paperwork
Are You A This Old House Fan Yet?
An understanding how houses work — at least generally — is something you may want to have when buying such a valuable asset. The type of reports that are included in property disclosure package PDFs are ones that try to bridge the gap between telling you what’s generally accepted and okay while also telling you specifically about the property. We know that you may not have the time, experience or desire to become fans of This Old House like Kevin is, which is why it’s great he is so he'll be able to offer up some observations as part of your overall diligence efforts. Here is what he would look for...
DEEP LINKS TIME
Doing Your Due Diligence Diligently
So much of the property diligence process can be online now, it’s funny to think that we would wait for mailed copies of 3R Reports to arrive before we could complete a property disclosure package. (Don't worry the wait is now for the PDF to arrive).
We thought it’d be wise to give you all the links we’d consult in one place when helping our buyers investigate a property they may want to buy and when we advise our sellers as to what information they’ll need to include in their disclosure package documents. These links are just part of the diligence process of course and there are many other resources, people and places you may need to go. Ping us for more details and if you have questions.
CITY + COUNTY LINKS
Seismic Hazard Areas (Not all Hazards are the same, so see which may apply)
https://data.sfgov.org/-/San-Francisco-Seismic-Hazard-Zones/7ahv-68ap
San Francisco’s DBI and Planning Department Online Map (click the map to see even more criteria like proximity to entertainment zones, mandatory discretionary review areas for remodeling applications and more) Look at historic parcel maps (the cool ones date from the 1930s)
https://sfplanninggis.org/pim/
When Was It Built? Probably not in 1900 (Water records, historic insurance maps, parcel maps and more)
Water Connection Records Specifically (click the online version link, look at volume number)
https://sflib1.sfpl.org/record=b2727934~S1
Confirm Building, Plumbing and Electrical Permits in San Francisco
https://dbiweb02.sfgov.org/dbipts/
Do you need a permit? (Probably, but it doesn’t mean people get them)
https://sf.gov/information/check-if-your-construction-project-needs-permit
Things Homeowners Get Dinged with Outside their homes (sidewalk, sewer vent covers)
https://sfpublicworks.org/permits-type/construction?page=1
Sidewalk dot color meaning
CALIF. LINKS
Overall Safety Risk by Location including fire (from the State of California)
https://myhazards.caloes.ca.gov/
Look Up the Other Agent/Brokerage on the DRE’s Site
https://www2.dre.ca.gov/PublicASP/pplinfo.asp
GENERALLY
Historic Photo Archive (Found SF)
https://www.foundsf.org/index.php?title=Main_Page
Historic Waterway Map reconstruction (SeepCity)
On Old Houses Generally (This Old House YouTube Channel, AskThisOld House is projects/home improvement)
DELVE INTO THE DETAILS
What You Should See in a Disclosure Package:
The Disclosure Documents Have A Lot That Will Be Inapplicable
Most of the disclosure package’s pages are taken up by a virtual reference library of a wide variety topics that could impact a house including earthquakes, landslides, fires, mold, more mold, termites, lead paint, flying saucers, locusts … okay, maybe not the last two but there is a lot of literature about many topics that matter and others are inapplicable.
Assorted & Sundry But Important Documents
From here on out there is a big smattering of documents that tell you all about a property that don’t come directly from the seller that buyers are entitled to receive according to the San Francisco Purchase Contract’s requirements.
The 3R Report (Official Local Government Report re Permit History etc).
Tells you the property’s most recent building permit history (usually, roofs, in-remodeling, windows, pest/termite repair or new additions) and the status of each item. You may get an original construction year or 1900 (which is the default year for pre-1906 era buildings). You’ll see the property zoning, unit count and allowed/current use (important if considering a multi-unit property or renting an in-law space out). If you want to see plumbing and electrical permits, Planning Department documents (like neighbor opposition to applications to expand, remodel or demolish) or historical information, you must visit the online sites for the Planning Department and the DBI. As with most things with the City, be sure to take note of the APN (assessor parcel number) as that’s a better way to pull a property than just the address.
Special Inspection Reports per Jurisdiction
Other areas will have other reports for items important to them. In the Bay Area, up north in Marin County, for example, you will have fire safety and brush clearance reports. In Alameda County, you will get sewer lateral pipe inspection reports.
Inspection Reports — The 2 Biggies
By their names, you’d think it’s obvious but sometimes they’re misnomers. You’ll see two main kinds — general property and pest/termite — and various specialty ones as appropriate. As we will say again below, pre-purchase destructive testing — opening up walls, drilling holes, prying apart things — is almost never allowed. Instead, we have to do our best to piece together a home’s history and context from documentation sellers are required to provide and your own diligence, which we can help guide as well.
These days, as we’ve said, sellers of older properties in San Francisco will provide two types of significant inspection reports along with the other documents we discuss in this section; units being sold in larger and more modern buildings will skip pest reports in many cases. The point of providing inspection reports is not only to give potential buyers information about the property that the seller may not know, but also to encourage folks to waive their inspection contingency rights under San Francisco’s standard purchase contract; that inspection right is very broad and is more asking to a buyer’s remorse clause, which is why seller and seller agents don’t like them or always push those contingency periods to be as short as possible.
The Property Inspection Report/Contractor’s Inspection
We’ve seen countless ones of these over the years we’ve been doing real estate. These reports are supposed to be done by licensed (and experienced) contractors who will look through a property’s various systems. Unlike pest reports (see below), the content and how comprehensive a report is will be governed by various industry standards and practices. Some reports are better than others.
There will be a logical progression of how a home is reviewed. More and more reports include photos these days than before. Property conditions will be compared to applicable building codes and practices. San Francisco’s inventory is older which means that there will be a lot of ‘existing, non conforming’ notes within many reports, most of the time this means that something was probably up to snuff when it was first installed but codes have since changed. Be careful though, as there are also many times where the condition observed is just done incorrectly.
The Pest Report
One thing we note is that it is highly unusual to see any actual pests flying about or scurrying from here to there onsite. Rather, the issues these licensed inspectors are supposed to find in their inspections are of the slower-moving kind that most people would consider regular upkeep of a home in a temperate, costal climate (we are not dealing with frost lines, the risk of radon, ice dams and all kinds of other things you’d see in other parts of the country).
In the pest report, remember that section 1 items are things that need to be done now; section 2 items can wait. The normal pest report amount of work that should be done in the City is usually about $10,000-$14,000. Some reports run much higher, some much less, which brings us to our next point.
Be aware of what areas of skipped, inaccessible or otherwise not covered by the pest inspection. Many inspectors may say, ‘consult a general contractor,’ or that something was ‘beyond the scope’ of the inspection. Some of those items that pest inspectors won’t touch is air quality, black mold types of issues (a different fungus than you’ll see in pest reports) and grading/soils stability.
Otherwise, the common items you’ll see in a pest report are:
Wood boring beetles — yes, they exist but are too small to see, look for their clusters of pin hole borings and some dust.
Dry rot is fungus (mold, but not that kind) that likes to eat wood, slowly in moist, coastal climates.
Termites are common here (be thankful we’re not in Asia or Africa as those termites don’t play).
Faulty grade, which is quite common, is when the concrete-wood-intersection of the foundation is too low or is otherwise underground (effectively a Vegas-style termite buffet line to the property’s wood framing).
Can you ask for more information or deeper testing? Once a pre-sale inspection is issued, it’s unusual if a seller or the seller’s agent will provide any more information than the inspector observed and wrote about in their report. Absent drilling test holes into stucco walls or under bay windows by pest inspectors, destructive or invasive testing where they peel back walls or pry up boards aren’t allowed before a sale usually.
These reports are supposed to be objective as they are filed with the state. In practice, there is some variation as people will have different, reasonable opinions. Also, some issues can be left alone for years and nothing will happen, while others are more pressing. As part of buyer diligence, you can always call up the inspector to ask questions and/or we can arrange for the inspector to come back onsite to walk-through their report (there will be a charge). Whether we do this before an offer is submitted or after depends on how much you like the place, how much competition there will be and what signal we want to convey to the seller. If we do a walk-through (or bring our own inspector) before an offer date, you’d be out the inspection fee/cost, but it would give the seller a very strong incentive to pick our offer over another with an inspection contingency for example as we’ve already done our diligence.
Square Footage and Parcel Size Documents
Perhaps among the most controversial of documents, this document is where a seller is required to list all the figures they for a property. This figure is the basis of how many people measure a property’s market value — dollars-per-square foot. While it is not the only factor determining market value, if people disagree or use different measurements the resulting differences in the resulting market value can be significant in a market where prevailing median prices easily hover between $900-$1,000/sqft.
One source behind the differences between stated totals on this disclosure, numbers on the MLS and tax records can be attributed to adding new living space to a property. If the space is newly redone (with permits), differences are due to the lag time it takes the DBI to update City tax records with the Assessor’s Office.
Remember that your property tax basis will be based on your purchase price and will locked in by Proposition 13 to rise no more than 2 percent a year unless you add new living space.
This is important to remember when you encounter properties with ‘unwarranted’ or ‘illegal’ living area (usually on basement levels). This is when the construction was done in the past and where you will see the seller agent or seller note that some of a property’s space is ‘unwarranted,’ or ‘illegal’ or added ‘without benefit of permit.’ If you ever decide to ‘legalize’ the space with permits or plan a remodel that adds living space, this space will be added to your property tax basis and will likely raise/change your assessed value (which is probably why people never pulled permits for unwarranted spaces in the first place). The good news is that reassessments for new square footage aren’t usually based on prevailing market dollar-per-square-foot rates.
The other contributing cause to different square footage totals can be attributed to how an area is measured (on paper versus reality)(LIDAR vs. tape measure), which standards are applied (include wall thickness? Subgrade areas?); why an area is being measured (refinance, remodeling vs. reassessment and Prop 13 concerns); to what is counted as “legal” or “warranted” space (think: lower levels, ground-floor suites).
Agents and brokerages are explicitly barred from telling you parcel sizes that aren’t otherwise publicly available and cannot tell you exact locations of a property’s boundaries. Of course, we would be remiss if we didn’t mention those other factors impacting market value, which include, location, layout, views, finish levels, styles, amenities, parking, proximity to parks, shops, freeways and much more.
Anytime A Property is Flipped... within 18 months
A separate San Francisco form asks for contractor contact information for homes owned less than 18 months (i.e., a flip) if a seller is required to complete a TDS. All the receipts and contractor information who did the flip work — i.e., the handyman, owner, contractor, etc, who did anything more than $500 worth of work. Along with permit information (if any) and items done without permits too.
Other common reports: Underground fuel storage tank (if a seller finds an old fuel oil storage tank they must remove it. More important for older buildings (pre-1950s let’s say), will be from Golden Gate Tank in San Francisco.
Sewer lateral pipe inspection (clay pipes connection pipes to the City’s main wastewater sewers that collapse over age and time); may be a written summary or a video (screenshots of, what one plumber told us, dirty movies')
Previous inspection reports received (you can track issues/areas of concern over time)
Roof inspection (or repair/replacement bids)
Mold remediation and testing reports
Assorted construction and/or estimation documents: Contractor estimates (even if work was never done), job cards from previous permitted construction work (which should have an online analog but the job cards are the primary source documents).
Once you are an owner, you can go to the Records Management Division at the DBI at Van Ness and Market and, showing that you are the owner of a property, will be allowed to look at microfilm/microfiche copies of archived plans submitted going back way back when. You cannot take pictures with your phone of them and you can sketch them and/or pay for paper copies.
Less common: lead remediation, lead inspection, asbestos remediation/encapsulation reports, soils or geotechnical, plumbing and electrical permits (accessible online however), blue prints, original construction documents.
For larger condominium buildings that underwent litigation, damage assessments, remediation plans and confirmation of such.
For San Francisco Historic Category A buildings you may have a historical survey document that will be important to review if there is any hope of remodeling.
For commercial buildings, a phase 1 and, if needed, phase 2 environmental site report and analysis.
Parking and Storage Disclosures
Behind people not liking a property’s location or not being able to get over a property’s paint colors, the next thing that people can really get worked up about is how big a parking space is and if their vehicle will fit (selling the car and getting a new one never occurs to people). Some places these are easy questions but in San Francisco there are plenty of big and small condominium or TIC buildings where there could be rotational parking arrangements in addition to unassigned tandem parking, stacker parking, parking space reassignments if you’re assigned a handicap space. Look to the preliminary title report to see which parking space is deeded to a condo unit and/or the right to park on the premises is discussed. Whether you can store things in your parking space and how storage is allocated in a multi-unit building, is also important to review too as there are times where the listed parking space or storage space fail to match the on-the-ground reality. Changing these assigned or deeded spaces require new legal documentation that must be recorded to be effective.
A Bunch of Malarkey?
Oh, it’s just the marketing material. You’ll see marketing statements, MLS information and, maybe, brochures.
Energy and Water Conservation Inspection Reports (’energy and water’/’energy cert.’)
Perfunctory and required point-of-sale work for any residential sale in the City. Pink certificates means water heaters should be double-strapped, weatherstripping installed along with operating smoke and carbon monoxide detectors. And, supposedly, low-flow showers, taps and toilets.
Special Cases (if applicable)
If this is a stock co-op purchase, you’ll see materials that a co-op board will need to review before they approve the purchase as well as various governing documents, references to shares and stock that transfer as well as the building’s finances similar to condo associations.
For Condo and TIC purchases
A slew or smattering of information about the relevant homeowner association. HOA docs must include legal documents called CC&Rs that define what a unit is and what conditions, covenants and restrictions apply along with bylaws and condominium maps (also seen on preliminary title report bullet-point items that lenders care about the most). The TIC HOA analog versions are not (and cannot be) recorded legal documents; they’re usually referred to as the TIC Agreement). You’ll see insurance information and, in some but not all cases, house rules, HOA meeting minutes, and any amenity handbook. Budget documents may include a professionally prepared, multi-year budget, long-term reserve study that forecasts replacement and repair costs from expected wear and tear over time, must containing the bare minimum disclosure — a completed form asking about the building (unit count, HOA dues amount, owner-vs-tenant ratio). The quality and abundance of these documents exponentially grow as units grows and the higher-end the amenities are. See our HOA and Condo Discussions here.
Fixers/Projects with Plans
If something says, ’approved plans’ or ’job-card ready’ be on guard as to what is really being included with the sale and what the real status of the plans are. Otherwise, these documents should contain architectural drawings, project documents such as engineering plans, permit applications, neighborhood notice documents and discussion of the project’s status.
Best consult assigned planners, design professionals or attorneys for clarity.
Be careful in reviewing any type of proposed or non-approved plans as building codes, policies, politics, practices and rules may have changed from when plans were first prepared. In addition to ensuring compliance with current building codes by consulting a qualified architect and/or contractor, it is also essential to understand the hard and soft costs and timelines associated with construction and development. Last, be mindful of the potential for NIMBYism (Not In My Backyard) in the face of what you’re trying to accomplish.
Multi-Unit or Tenant-Occupied
Leases, tenant information, operating costs, information about evictions, vacancies and buyouts. If any of the required pre-sale and/or pre-buyout forms were filed or served to tenants. Whether current and past tenants claim protected status for eviction purposes (important for condo conversion potential), future use potential and lending considerations. Insurance information, property management contacts.
At the COPA...
For buildings with 3 or more units, San Francisco places a requirement that a group of qualified non-profit housing groups (QNP) be given a head’s up with advance notice that the property is coming to market and, after marketing it and getting a contract in place, a potential right of first refusal for a given group to match an otherwise prevailing offer. Most times the qualified non-profit groups will not have the will or resources to take part, but still they have the right to know first.
Probate Sale Information/Court Confirmation Instructions
As we talk about elsewhere, probate and court confirmation home sales are different and add an extra layer of intrigue to the buying process. The easiest way to think about it is that there will be an auction presided over by a probate judge or magistrate to confirm a property’s purchase price that resulted from a quasi-normal marketing period. These documents will instruct you about the process, contain various orders related to the fact that the property’s owner didn’t leave their affairs in order or that there was a dispute between the heirs or beneficiaries of the late owner. Property history and information will probably be lacking two-thirds of the time, while there are times where the folks getting the property ready for market did some diligence and improvements since taking over the property to prepare it for sale. Nevertheless, there will be plenty of notes or times where you’ll see that these types of sales are going to have limited information about a property’s past. This is not like a foreclosure sale or REO sale. Take a look at our Probate Sale guidance here.
Agency Relationship Information Documents, Various advisories
These documents spell out our agency relationship with you and our brokerage. They excerpt parts of the Civil Code that say we owe you the highest level of care in the form of various fiduciary duties like loyalty and confidentiality along with being expected to treat everyone involved in a sale per the covenant of good faith and fair dealing. If there is a situation where the buyer and seller agents end up being the same people, all parties need to agree this is okay in writing. There are also forms that say you understand that there’s a fair chance we may help you buy a listing listed by other agents in our brokerage but that we are nevertheless your agents and the listing agent happens to be in the same brokerage as us. There are some more implications that we can discuss with you if the need arises but otherwise we think you get the idea.
2024 Updates:
Starting in August 2024, the way buyer agents who are REALTORs is changing. Previously this was almost exclusively a seller-paid cost (nevermind that it it your money that make up the sale proceeds that funds that cost). Without getting into it here, suffice to say that there is a bit of uncertainty as to buyer-side agent compensation but the market will find the solution with the main consensus being seller-paid credits through closing as being the means by which to accomplish the end of ensure buyer agents are properly compensated for their time and efforts.
See also the Short-term Ownership flipper/contractor disclosure
Mandated deck inspection requirements starting in 2025 for buildings with 3 or more units and decks with wood components (assume all decks)
Good for the Goose, Good for the Gander — The Most Boilerplate of the lot
The vast majority of the disclosures will be boilerplate documents from the state and local level talking about the ins and outs of buying and selling real estate. Other bundles of forms and disclosures related to lead building materials, radon (rarer in San Francisco), earthquake risks and environmental conservation (water and energy).
The vast majority of documents that follow the relevant documents are usually the hundreds of pages of advisories, market conditions notices and notices about smoke detectors, carbon monoxide detectors, lead paint, water heaters (new gas ones will be banned after 2030). There will be plenty of notes about contingencies, terminology, the respective duties and obligations us agents owe you as well as an emphasis on more aware buying.
The documents that matter more are ones that zero in on the property itself such the natural hazards and environmental risks report (usually from JCP, Property ID, or similar) which will show where the property sits in relation to seismic hazards zones, wildfire risks, landslides, liquefaction and other things such as leaking underground fuel oil tanks, chemical/hazardous waste and your proximity to munitions.
The Earthquake Hazards form that most people will say “don’t know,” or “doesn’t apply.” This form asks if foundations are bolted down, if there’s any brick in your foundation, if there’s a garage door opening that hasn’t had an engineering upgrade and other questions about homes on hillsides, homes with post and pier foundations and if your water heater is double-strapped (to prevent tip-overs that ignite gas supply lines).
Most agents will simply link to 4 booklets concerning the risks from lead paint, seismic issues (earthquake risks), green/environmental standards and energy efficiency and there will be the explainer book for the JCP report.
DELVE INTO THE DETAILS
Not On the Books?
The San Francisco Treat: Unwarranted Work (aka Work Done Without Benefit of Permits) and Unwarranted Spaces (aka, the off-the-books In-Law Space behind the garage)
Sooner or later, we’ll come across the issue of warranted vs. unwarranted improvements and/or living spaces. As you’ll see below, there are many meanings and implications to consider when it comes to each from safety to insurance to rental potential.
Why would there be non-permitted work onsite?
So why would anyone want to avoid getting permits for remodeling? There are various reasons—moral objections, fear of reassessment, scheduling, hassle, etc. You’re supposed to get a permit if the work exceeds $600 or implicates electrical or plumbing systems. But almost everything is $600 these days, right? Plus, many folks believe it opens a can of worms.
That said, having permits is important not only for health and safety reasons (not to mention legality) but for practical ones too. If you get reported by your neighbors for doing work without permits, the City is not pleased and will inspect with vigor (versus the more laid-back approach you’re likely to get if you applied for everything upfront). Permits are also crucial for resale purposes. If a would-be buyer sees that work has been ‘done with permits,’ there’s a certain assurance and peace of mind that comes with that designation. But even permitted work and spaces may be called into question in light of 2022/2023 scandals at the DBI and related federal probe for example.
The Implications
Here is our handy unofficial, off-the-cuff chart that goes over how different people may view, process and handle varying definitions of living space you may see out there. Use the following as only a rough guide as you need to consult with the appropriate resources including the documents and relevant professionals who work in this area (i.e., architect, permit expediter, land use attorney, Planning Department/DBI, etc).
Legal | Warranted | Unwarranted | Non-Conforming | Illegal | |
Real Estate Agent POV | Ideal to sell but there’s still potential variation in reported square footage | (see previous) | Will often mention this in the ‘agent-only’ remarks and disclose this fact with a buyer-beware vibe. See Square foot advisory. | See ‘unwarranted’ + if there are tenants in the space there are other risks you should consult. | See the last two entries to the left as it may be just a euphemism unless they’re talking about red-tagged. |
Owner Occupier POV | All the benefits of market appreciation as time passes and if property is maintained or added onto | A property’s highest and best use — whatever that means — is defined by its zoning but its real use (and that of neighbors) will be precedent that tends to control absent variances or other zoning changes. | Space doesn’t appear on tax or city records. Does it means it’s habitable? How will appraisers look at it? Why is it not on the books? Is the construction work sound? Maybe it’s fine for a ‘social room’ but not so for sleeping... | Expressly barred from being a ‘legal’ living space, but used as such anyway — risk of being reported and being compelled to upgrade space. | If health and safety issues are implicated, then beware! |
Pre-Sale Inspector POV | Space has been approved, inspected and on record as “X” which matches actual use. | Will confirm with the 3R report for a property. | Will remark on this in report. | Does the space meet minimum height standards (7 ft, 6 in)? 70 sqft? With 2 means of egress? Light and air standards meaning there is some? | Ultimate no-no. Uninhabitable because of fire, illegal renovation or health and safety concerns if red-tagged. Also non lendable in most cases. |
Appraiser POV | No issue but may observe variation from tax records; will measure space themselves anyway. | For appraisals, appraisers will likely go by area practice and custom and count observed space as livable... | ...So if most people count this space. They will want to see smoke and carbon monoxide detectors. |
