Last month I gave you an update on the requirement of an affidavit of disclosure in connection with all sales of land, other than subdivided land, in any unincorporated area. An alert reader, Jim Nierenberg of Long Realty, called to let me know that apparently some individuals in the real estate community believe that the affidavit requirement doesn’t apply to land that has a dwelling on it. It also seems that some people believe the requirement applies only to land that can be legally divided into smaller parcels. I don’t believe that either of those interpretations is correct.
I can’t figure out the origin of the belief that the affidavit requirement doesn’t apply to land that has a dwelling on it. Nothing in the statute imposing the requirement indicates any such exception. If I sell a 10,000 acre ranch, and the ranch happens to have a ranch house on it, I am still selling land that is not “subdivided,” regardless of the presence of the house.
The notion that the affidavit requirement applies only if the land can be legally be divided into smaller parcels is a little bit easier to understand. If the parcel can’t be divided into smaller parcels, then it is “subdivided land,” and therefore excepted from the requirement, right? Or maybe since the requirement applies only to a seller of “five or fewer parcels of land,” if you are selling a single parcel of land that cannot legally be divided into smaller parcels, then you don’t have a sale of “five or fewer parcels” within the meaning of the statute, right? Well, wrong, actually (at least in my opinion). The exception for “subdivided land” doesn’t refer to whether or not the parcel being sold can or cannot be divided into smaller parcels. As for the “five or fewer parcels” requirement, one parcel is fewer than five, so I think the statute applies to a sale of even a single parcel that is not presently “subdivided,” regardless of whether it can be divided into smaller parcels.
The key to applying the statute is the meaning of the phrase “other than subdivided land.” I think that phrase refers to land that is part of a recorded subdivision, i.e. subdivision lots, meaning that only a sale of subdivision lots is excepted from the application of the statute. If you are selling any land that is outside the city limits and is not part of a recorded subdivision, I think the statute applies, meaning the seller must provide an affidavit of disclosure meeting the statutory guidelines. If anyone has any information to the contrary, I would like to know about it.
REAL ESTATE BROKERS AND SALESPERSONS MUST BE
COMPETENT OR DISCLOSE LACK OF COMPETENCE IN THE
PARTICULAR TYPE OF TRANSACTION BEING UNDERTAKEN
Jim Nierenberg also pointed out a new regulation about the duties of real estate brokers and salespersons which may not be getting sufficient attention. The regulation requires that a salesperson or broker shall not undertake to provide professional services concerning a type of property or service that is outside the salesperson’s or broker’s field of competence without engaging the assistance of a person who is competent to provide those services, unless the salesperson’s or broker’s lack of expertise is first disclosed to the client in writing and the client subsequently employs the salesperson or broker.
To cite a clear example, take a real estate salesperson who is familiar only with sales of houses in subdivisions. If that salesperson wants to handle a sale of acreage for a planned subdivision, the salesperson must either (1) engage the assistance of someone who has familiarity with such a transaction, or (2) tell the property owner, before the property owner hires the salesperson, that the salesperson has no familiarity with such a transaction.
The above example is, as I mentioned, meant to be a case where the regulation clearly would apply. There can obviously be situations where determining whether the particular transaction is within the salesperson’s “field of competence” is a much closer call. Even transactions involving different types of commercial property, for instance, may have sufficiently unique requirements and pitfalls to be considered different “field[s] of competence.”
The point is, of course, that licensed real estate professionals have differing areas of competence, and that simply having a real estate license does not automatically make the licensee competent in all types of transactions. The safest course of action is for a person hiring a licensee to ask about the licensee’s qualifications, and for a broker or salesperson to enlist the aid of a qualified licensee, any time there is any uncertainty as to whether a particular transaction is within the broker or salesperson’s “field of competence.”