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New State Law Requires Sellers to Disclose Flaws in Property Listed and Non Listed
Source: New Orleans CityBusiness
Publication date: 2004-05-10
In less than two months, Louisiana residential property owners will be required by law to spill the beans to buyers.
Until this summer, single-family home sellers have not been required to disclose property flaws. That will change July 1 when a new property disclosure law will require all Louisiana residential real estate sellers to make buyers aware of known defects.
Officials from the Louisiana Real Estate Commission and New Orleans Metropolitan Association of Realtors strongly support the new disclosure rules, which they say will protect buyers and sellers.
It eliminates misunderstanding about the condition of a property and therefore reduces the potential for litigation between buyers and sellers, said Mark O. Rodi, chairman of the commission and president of the Gulf South Real Estate Information Network.
Sellers who don't want to create their own forms can obtain standardized forms from the commission and NOMAR. The form contains 34 questions, most of which can be answered yes or no, dealing with the land and structure; termites and insect damage; plumbing, water, gas and sewerage; electrical, heating and cooling systems; and miscellaneous issues such as asbestos and zoning.
In the past, real estate agent disclosure forms varied from region to region, depending upon differing needs, Rodi said. The commission helped create the new form, developed with statewide input from the public and professionals, he said.
What we did at the Real Estate Commission was take various issues from various parts of the state and include them in the disclosure (form) because we could only have one statewide mandated form, he said.
State lawmakers had no problem forcing sellers to divulge information to buyers. Act 308 received all yes votes last year when passed by the Legislature.
Two bills now await legislative approval, which would amend the form to include additional information. House Bill 1147 requires property disclosure forms to contain information about prior zoning. Senate Bill 52 would require forms to disclose whether a particular property falls under a homeowners association.
I can't see a downside to it, said Jeffrey May, executive director of the Greater New Orleans Fair Housing Action Center.
Full disclosure of property defects is important in New Orleans, because the city's housing stock is old, he said.
May said some homebuyers were not told the extent of problems such as termite damage. In those cases, the new owners end up with a money pit, he said.
Adrian Pappalardo, president of the New Orleans Metropolitan Association of Realtors, said the new disclosure rules will level the playing field for homebuyers.
Prior to this, the Realtors had an unspoken agreement that all the residential listings that a licensee would take would have the (old) disclosure filled out, he said, adding that the old form has been revised at least six times to deal with issues such as mold and asbestos.
Although full disclosure is being mandated for the first time, Louisiana's Realtors have been doing a good job with their own disclosure forms, said Wade Ragas, director of the University of New Orleans' Real Estate Market Data Center.
Those disclosure forms we have in Louisiana have been extraordinarily successful in making sure buyers knew what they were getting and sellers were disclosing factually all the information about their property, Ragas said. It's a very good disclosure form. It's a very thorough form. It's not invasive. It deals just with factual information necessary so the buyer knows what they're purchasing. And it's been used by the brokerage community now for, oh, 5 or 6 years on just about all their transactions.
Compared with other states, Louisiana has one of the lowest rates of claims for Realtor malfeasance or for Realtor or seller failure to disclose in the country, he said.
This form has helped reduce claims in terms of litigation involving Realtors in this state. Mississippi's got a very high claim rate. So does Tennessee. Texas has a higher rate than us, he said.
The Louisiana Real Estate Commission and the New Orleans Metropolitan Association of Realtors have posted the disclosure form online at www.nomar.org. Sellers are not required to use any specific form, as long as the form used discloses the minimum language prescribed by law.
Experts don't think the new rules will adversely affect the real estate market.
I don't think it's going to have a huge impact for anybody other than somebody that didn't want to disclose what was wrong with the house, Pappalardo said.
It's not a very complex piece of paperwork. It's really not going to be any major transition for us Realtors, he said.
(Copyright 2004 Dolan Media Newswires) |
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Real Estate
By Judi Russell New Orleans Real Estate trends
Sales of existing homes remain strong in the New Orleans area - strong enough, particularly at the high end, to prompt the development of new inventory.
Real estate developers in several parts of town are breaking ground on upscale subdivisions, betting that as vacant land within commuting distance of the city becomes more scarce, those who can afford it will pay dearly to get their pieces of paradise.
Ample money is available to finance new subdivisions, for developers who have a good track record, says Darryl Chauvin, senior vice president at Hibernia National Bank. Other factors the bank weighs are the marketing plan, the developer´s equity and in some cases, presales.
Chauvin says Hibernia is financing a variety of new developments, some upscale and some with starter homes. Favorable interest rates are one factor motivating people to build, but Chauvin thinks people just naturally crave a home of their own. "Folks do want to buy lots and build houses," he says.
It takes a fairly large parcel of land to build a subdivision from the ground up, and that´s what the Krantz family had on its hands when the Jefferson Downs racetrack closed in the early 1980s. Bryan and Vickie Krantz are turning the old track, which is the largest undeveloped plot of land along Lake Pontchartrain, into a swanky subdivision called Gabriel. The development contains 217 lots, over half of which are sold. Fifteen homes are under construction. Lot prices range from $145,000 to $550,000 for a spot along the Lakefront; one section will be used for higher-end town homes.
Lynda Nugent Smith, sales agent for Gabriel, says her clients want to live in a community that is gated, guarded and heavily landscaped. The proximity to Lake Pontchartrain is lagniappe. "People love that water."
Vacant land is at a premium in East Jefferson, Smith says, and existing subdivisions in that area have aged.
"There´s nothing new about Metairie anymore," she says. Many people would rather build from scratch than buy a teardown. They want the perks that come with a planned community, such as ponds, walking paths and the assurance that their neighbors´ houses will have to pass an architectural review.
Sales have also been brisk at Hickory Ridge Estates, a 48-lot subdivision on the eastern edge of Elmwood. Hickory Ridge developers include Rathborne Properties; Robert W. Merrick, chairman of Latter & Blum Inc., and several private real estate investors. All but three of the subdivision´s 70-by-138 lots are sold; prices were around $137,000.
Marymichael Petitbon, an agent with Latter & Blum who is handling the lot sales, says most of the lots were sold in two months. Many went to young families who wanted new homes in a brand-new subdivision.
"It´s supply and demand," Petitbon says. The subdivision, which is close to Airline Highway, the Earhart Expressway and Clearview Parkway, is not gated but has an elaborate entrance and lots of landscaping.
In eastern New Orleans, a 17-year-old subdivision is opening a pricey new section. Eastover´s last phase of development has 70 lots, 28 of which are presold. The lots are selling for $150,000 each. The first 30 buyers will be considered charter members of Eastover and receive a slice of ownership in the subdivision, a 10-year membership to the country club, a golf club and other perks. Only those 30 lots will be sold as land; after that, buyers will pick out a house style and lot and Eastover builders will build the house.
Genteel on the West Bank
Nathan Watson, a developer whose background includes work with Columbus Properties, hopes to draw buyers looking for private, heavily wooded building sites to The Arbors, a subdivision he is carving out on 92 acres in Lower Coast Algiers. The Arbors will have 100 home sites, ranging from a half-acre (priced at $73,200) to an acre-plus on the water (more than $200,000).
Watson says he was motivated to build the subdivision by his own interests. "My wife and I wanted a place with more room and a beautiful natural environment plus a community setting."
He says a market analysis showed him there was a strong market for this type of community on the south shore of Lake Pontchartrain. Homes will be situated on the lots so that 70 percent of the existing trees will remain, Watson says. The trees plus large retention ponds will promote drainage. "We will reduce peak storm water runoff," he says.
The Arbors will have an entrance on English Turn Parkway and a secondary exit onto Patterson Road. The subdivision will be gated and surrounded by a conservation buffer and a wrought iron fence.
Another West Bank subdivision, Algiers Riverpoint, is opening a new phase. The development, located on the outskirts of Algiers Point, is gated. Builders are required to erect houses that resemble the old homes still standing in many parts of New Orleans, with porches, working shutters and period lighting. Terrie Hughes, a real estate agent with ERA Stirling Properties Inc., is one of Riverpoint´s developers. Lots in this development are going for $46,500 to $69,000, she says. Plans call for a strip shopping center to be built on the outskirts of the subdivision to function as a kind of neighborhood corner store.
North of the lake
The north shore is seeing a boom in new subdivisions, says Jim Lark, a residential specialist with ERA Stirling Properties Inc. A lot of vacant land is still available, Lark says, although the restrictions on builders are tightening.
The closer homes are to the Causeway, the more desirable they are to most north shore buyers, Lark says. "New Orleans is still the lifeblood," he says.
New subdivisions on the north shore aren´t always gated because residents aren´t as crime-conscious as buyers in New Orleans, Lark says. (To have a subdivision gated, residents have to agree to maintain the streets.) But many of these subdivisions do have grand entrances, with lavish landscaping.
One of the most upscale is Arbor Walk in Madisonville, where homes are selling from $450,000 to $580,000. The subdivision will be gated but not guarded, says Sandra Pecoraro, real estate agent with ReMax Real Estate Partners in Mandeville.
Also in the high-end range is The Estates of The Reserve, a new section of The Reserve in Mandeville. House prices there are from $400,000 to $500,000.
It´s a good market for builders selling upscale houses on the north shore, Pecoraro says. When Big Oil moved a lot of jobs out of the area six or seven years ago, the market became overstocked with expensive homes, she says. Building slowed on the high end. Now, builders are once again erecting so-called mini-mansions, and they are selling like hotcakes, she says. • |
