You Can Relax About
REALTOR®-friendly AB 920
Agents confused by "irresponsible statements" and "misinformation"

by Greg Rufe, JCP President

Article published in Broker*Agent Magazine
October 2004 Issue

Worried agents are asking, "Is it really true that on January 1 a new law will increase the liability to me and my seller for not using the 'right' Natural Hazard Disclosure report?" Many agents are being told just that by their disclosure company, their brokers and even their corporate officers.

Relax. The answer is "No." According to the California Association of REALTORS®, the new law (AB 920) "does not create new obligations for you or your clients...it is C.A.R.-sponsored legislation designed to simplify and clarify existing disclosure laws."

Confusion about the law erupted in August when agents across the state began receiving faxes and emails sent by a prominent California disclosure company, including a document deliberately crafted to look like a real newspaper article. The fake 'news' incited fear about AB 920 and claimed that only that company could protect agents against the "additional liability" the law creates.

In response to the abusive marketing tactic, C.A.R.® issued a ReaLegal® bulletin on August 10 pinning the confusion on the "irresponsible statements" and "misinformation" being circulated to California REALTORS®.

The association's legal counsel reaffirmed the beneficial purpose of AB 920 for REALTORS® and sellers, adding that, while it is clear that agents and sellers have a duty to exercise good faith in choosing disclosure companies, this duty "has been a part of the law for many years, and is a standard followed by responsible REALTORS® regardless of what the law says."

Complying with AB 920 boils down to this: "Show me!" Before choosing a hazard disclosure provider, challenge their claims, ask for proof of their Errors and Omissions (E&O) insurance, demand clear and decisive disclosure determinations ("Am I 'IN' a hazard zone or not?"), and find out for yourself which disclosures the company covers and how they are determined -- relying on a competitor for an honest appraisal of another company's service can be hazardous to your clients.

In a nutshell and in support of AB920...

Effective January 1, 2005, AB920 amends the Natural Hazard Disclosure Statement in order to provide an optional acknowledgement that the representations made in the natural hazard disclosure statement are based on an independent third party report (such as The JCP Report™) which creates a legal safe harbor for sellers and agents by characterizing the NHD report as a 'substitute disclosure.'

REALTORS® will be delighted with this amendment to the Natural Hazard Disclosure Statement since it addresses selling agents’ long-held concern over liability for signing this Statutory Form. JCP recognized this concern in the industry and last year joined C.A.R.® in support of this bill by sending letters to Senator’s Nakano, Torlakson and to the Senate Judiciary Committee. As stated in JCP’s letter to the Judiciary Committee, “JCP would assume that all companies in the business of providing Natural Hazard Disclosure Reports to the real estate industry would support this needed clarification to the Statutory Form”.

To order a JCP Report, call 800-748-5233 or go to http://www.JCPreports.com