The Real Deal

By Sharman Egan Lagniappe columnist

Over the last several months, I’ve chronicled the real estate adventures of Sherrie Quander. Sometime last year her friend David (at least I think they’re still friends) convinced her to move from the LA on the Left Coast (where she’s lived for almost 30 years) to the LA on the Gulf Coast. David moved here a couple of years ago and has since become an unpaid evangelist for the Mobile Area Chamber of Commerce. I wanted to see what we could learn about our little piece of paradise from Sherrie’s escapades.

Back in February I reported that Sherrie’s home – a 3 bedroom, 2 bath, 1,400-square-foot townhouse in the San Fernando Valley – was on the market for $325,000. She’d priced the house aggressively, and she expected it to sell in the low 300s within a couple of months. She planned to buy something similar here for $150,000 to $200,000. She’d be able to pay off some debt, make a down payment on a new home and still have a nest egg in the bank.

Back in March, everything was going according to this plan. She had an offer on her house and expected to be in escrow within a few days. Then things went cattywampus, as they sometimes do in the wacky, wacky world of real estate sales. The deal fell through.

When we last checked in with our superhero, she’d thrown caution to the wind. She moved to Mobile in late April, and was living with friends here until her house sold.

Now once again there’s good news to report: On May 30, her broker called to say they had an offer. They reached an agreement, and the deal is in escrow.

So now the fun really begins. First of all, Sherrie has to get this deal closed, and as she put it, “California real estate is intense.” All you have to do is look at the document fondly referred to as the RPA-CA (the standard form used in California residential real estate transactions) to get the general idea. It’s eight pages long, for crying out loud (filled to its very narrow margins with mouse type, I might add). And there’s a reference in it to a required attachment (a C.A.R Form BIA). That’s four more pages.

The RPA-CA covers everything from smoke detector installation and water heating bracing (“if required by law”) to the Natural Hazard Zone Disclosure Statement (“NHD” for those of you who are tracking the acronyms). There’s an entire section about the Sex Offender Identification Line maintained by the California Department of Justice. And then there’s an ominous reference to “Statutory Disclosures” which “include but are not limited to…,” followed by a list.

After a little research, I learned that California requires between five and 15 separate disclosure forms, depending on the specifics of the property.

How does this compare with the sales process in Alabama? For starters, a typical purchase agreement here is two pages. And, to make it really easy on us, the nice folks up in Montgomery don’t require sellers to provide a seller’s disclosure form.

Sounds like a good thing, huh? Streamlines the process, and we don’t need the “gub-ment” sticking its nose in everything, do we?

Only if you’re selling a home, in my never-to-be-humble opinion (and this comes from someone who once voted a straight Libertarian Party ticket).

Now I’ll admit the Granola State has gone a little overboard on the whole disclosure thing. But Alabama is at the opposite extreme, offering virtually no protection to real estate buyers. It’s one of a few “buyer beware” states left in the U.S.

According to an article in the Alabama Real Estate Commission’s Spring 2008 newsletter, written by Charles R. Sowell, General Counsel for the Commission, “caveat emptor (let the buyer beware) as spelled out by the Alabama courts means that sellers and their agents in used real estate transactions, as opposed to new construction, have no duty to disclose defects in the property.”

So what the heck does that mean? If you’re buying a home here, you might get a seller’s disclosure statement but the law doesn’t require it, as it does in most other states (even Mississippi, as of July 1, 2008 – since when are we more behind than MS?) And chances are, if you get one, it won’t carry much weight if you have a dispute with the seller after closing.

According to Mr. Sowell, based on an opinion handed down by the Alabama Court of Civil Appeals last summer, if a property is sold “as is,” it doesn’t matter what the seller or the seller’s agent told you about it. And most real estate purchase agreements in Alabama specify that the property is sold “AS IS.” Note the caps.

So…if you’re buying a property in Alabama, you’d better do your due diligence. That means spending the money for a good home inspection. You might also need expert inspections of major components (HVAC, roof, foundation, etc.).

And buyer beware applies to everything, not just to the physical condition of the property: boundaries, flood zones, outstanding liens, taxes, zoning, etc.

I’m looking forward to the day when the Alabama Legislature passes laws providing some reasonable balance of power between buyers and sellers in real estate transactions. In the meantime, you can’t rely on anything the seller or the seller’s agent tells you about a property you’re considering buying.

So, beware Sherrie. You’re not in California anymore.

Sharman Egan is Lagniappe lagniappe columnist. Contact her at Sharman@SharmanEgan.com.

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