Orit Gadish - Probate Real Estate Blog

All too often I see real estate agents making reference to “probate code”, while not providing specific citations, claiming that it waives legal requirements that they prefer not to adhere to.  One example is the non-compliance of LA’s Municipal Code 96.300, requiring a seller to deliver the City of LA’s “9A Report” to a buyer either prior to entering into an agreement of sale, or, prior to the close of escrow.

A PPF recently reached out to me via my Probate and Trust Academy to inquire about a real estate agent’s Addendum to the C.A.R purchase agreement.    It addressed the “Owner’s Declaration” section of the “9A Report”.

First, a quick background:

In the city of Los Angeles, section 96.300 of the LAMC (municipal code) indicates that the seller of residential property within the City of Los Angeles shall apply to the City for a report of Residential Property Records and Pending Special Assessment Liens (aka, the “9A Report”), and deliver such report to the buyer, either prior to entering into an agreement of sale or prior to the close of escrow.   The application includes a section for the Owner’s Declaration, where the seller indicates the current status of devices and materials that must be addressed as a result of local laws (Los Angeles Municipal Codes).  Under the “Owner’s Declaration” there’s a penalty of perjury statement, indicating “I, as owner, declare under penalty of perjury that the following statements are true and correct for the residential building for which this report is sought.” 

The provision that was written by the real estate agent in the Addendum indicated:

“The owner’s declaration section which states that Seller is responsible to address Water Conservation, Security Lighting and Locks….Smoke and Carbon Monoxide Detectors… Was marked as Seller to complete prior the entering this escrow and only to facilitate obtaining this completed report to tender to prospective buyers.  Seller is not obligated to do any retrofitting for any City, County or Municipality under the probate code, the responsibility to complete the above items AFTER CLOSE OF ESCROW, will be the complete and total responsibility of the Buyer, at Buyer’s expense. Seller’s representative has no knowledge as to the status of any of the required items as stated herein or in said city report and does not represent that any retrofitting has ever been done to the property, pursuant to LA City Municipal Code (or any other local municipality requiring such report)”

This agent’s addendum creates many problems for the agent’s fiduciary client, the PPF:

1. There is no such probate code that relieves a seller of real property from complying with local laws.  The seller (PPF) has a responsibility to obtain an understanding of the local laws and comply with them.  Agreeing to their agent’s provision exhibits the PPF’s breach of fiduciary duty to their client.  
2. The seller, which is the agent’s fiduciary client, is signing under penalty of perjury, within the “Owner’s Declaration” section of the “9A Application” that the statements being made are true and correct, yet, the Addendum states otherwise.  The Addendum states that the answers were marked as “seller to complete” only to facilitate obtaining the report.  In essence, the seller is admitting to being guilty of perjury and is exhibiting criminal intent by making that statement – the statement that the seller is aware that the questions are not being answered correctly to the city of Los Angeles.
3. The seller’s agent, in this case referred to as the “seller’s representative”, is making a statement that they have no knowledge as to the status of any of the required items referenced in the application, and, that by answering yes to some of the questions they do not represent that any retrofitting has ever been done, pursuant to LA Municipal Code.  This is an excuse for the agent not to uphold their fiduciary duty to the client and advise the client that it’s prudent to hire a retrofitting vendor specializing in this, to inspect the property and advise on the work that’s required to be completed prior to the close of escrow, to comply with the law. 

In this case, both the seller and seller’s representative have no interest in conducting due diligence to ensure the property adheres to local laws, and, both agree to disregard local laws, pointing to a non-existing probate code as an excuse for failing to comply with the law.

One of the devices referenced in the “9A Application” are carbon monoxide detectors, which are also required by state law.  State Senate Bill 183, aka the “Carbon Monoxide Poising Prevention Act” requires that a carbon monoxide device be installed in all dwelling units intended for human occupancy.  So, by making the statement that the seller and seller’s representative are not aware of the status of this device, is negligent, as this is a state law, and, the C.A.R. Probate Advisory form, which is part of the purchase contract, reminds the seller and seller’s representative that the sale is not exempt from this state requirement.

What can go wrong?  The property sells, and, most escrow officers will let this close, and the family moves into the house.  There are no CO detectors, and, the gas stove is emitting high levels of carbon dioxide, and, there are no detectors in the home to alert the occupants.   Toxic levels of CO exposure prevents oxygen from reaching the brain and heart, and, unfortunately this leads to death.  Now the seller and the seller’s agent have a big problem.