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<Duff>
posted
Hi to all,
Iâ™ve got a determined little round-robin research project underway, and can think of few more fruitful places to toss this up. If you've already got some fieldwork underway on this, let's join forces.

Hereâ™s the skinny-

********************************************
Question:

How to get mandatory tree hazard inspection, detailed reporting, and formal disclosures into the standard real estate sales document package, just like termites and dry rot in the built structures.

Is there any reason why insurance and finance companies would not get behind this whole-heartedly?

Can you think if a clearer path to raising rudimentary awareness and protection for the adult homebuyers who will manage the other 80% of the urban forest with their birthday-present chainsaws?

Does Termite & Dry Rot Inspection dampen buyer enthusiasm?
What about mandatory disclosure in the negative/affirmative/don't know format?

Though all terms of real estate contracts are (of course) negotiable, in Southern California the SELLER is generally responsible for the cost of providing the Termite Inspection Report to the principals in the sale transaction, and for eradication & mitigation of all Category I & II (major & nearly major) problems reported.

This often includes thousands of dollars worth of wood replacement, pesticide tenting, soil movement, moisture elimination, etc. All of this takes place, including a certificate of completion, prior to an escrow closing.
In Cali, sellers must also fill out a copiously detailed disclosure form, revealing everything from leaks to recent deaths to neighborhood nuisances to local sex offenders.

There is also required reporting of flood and earthquake zones, environmental hazards such as mold, lead paint, bad water, etc., and potential for damages therefrom. All of these are usually provided to the seller's agent by vendors of such information, as a package, and again usually paid for by the seller.

The seller (or the seller's agent) usually delivers copies of the report or certificate of completion and the full disclosures to the buyer, and both buyer and seller must initial and sign throughout that they have understood and accept the situation. The escrow and financing companies also get copies.

Smart sellers do all the pest control work before the buyer-locating work, to avoid any escrow-breaking surprises.
Whoever pays for it, the cost is minimal when compared with the potential risk.

Smart buyers order independent termite inspection and home inspection reports. Sometimes the buyers offer is made contingent upon successful resolution of disclosed/reported issues.

While I do not think California law REQUIRES the pest control completion certificate (and every state is different in this regard), very few lenders will consider a property transaction without it, for what should be obvious reasons. Might these same considerations drive (and similarly obviate) mandatory tree hazard inspection, disclosure, and mitigation on property transfer/financing?

More can be gleaned at NOLO Press:Required Disclosures When Selling Real Estate

Valuation and/or appraisal are closely related other matters; perhaps.

Traditionally, the cost of the property appraisal is borne by the buyer in SoCal. It, too, is required prior to escrow closing if financing is involved. Generally the bank (or what-have-you) orders the appraisal done by one of their own phalanx of acceptably certified appraisers, as a preliminary step to making a firm financing offer. They like to know and control the loan-to-value ratio, again, understandably.

My initial thought was that homeowners' insurance companies could be the most ardent champions of tree hazard inspections. However, in my recent personal escrow experience, the insurance company did not even send an inspector. They received a change of lienholder from the finance company, which itself required adequate insurance coverage. It was the finance company that insisted on the inspection docs and nobody asked or offered information about the trees except me. (In this case, the property was selected largely because the trees are good, in my professional opinion)
.

Thoughts? Comments? Next move?
_________________

Pat Duff


Awards Chair for Western Chapter ISA
Contact me for details and 2004 nomination forms!
 
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<Scott>
posted
I am a licensed r.e. broker in two states and a licensed and certified arborist and registered consulting arborist.

My first reaction is that there will be way too much variation among experts both in terms of "hazard" and what to do about it. This would require standardization in technique and we are not there yet. IMO we are no where near ready to standardize tree risk inspections for such statutory purposes. There is too much we do not know.

My second reaction is that insurance companies may not experience enoght tree related losses for this to be an issue. Debbie Ellis in CA tried to get loss data for trees and insurance companies do not track trees as separate loss generators.

My third reaction is we do not want insurance companies involved. In the UK insurance companies are cutting down trees like crazy allegedly to prevent subsidence damage to structures. The risks are not always clear or substantial. Trees are just an easy statistical target.

My fourth reaction is the lenders won't care about loss exposures if the insurors are not. Do we really want trees to become like underground oil storage tanks, lead paint, or psychological stigma? Holding up closings? Costing big bucks? When concerned about loan to value the lenders are concerned about market value and that will require a state certified real estate appraiser not a tree appraiser (even if you convince them trees add to market value). If the structure is insured for tree damage (or tree damage is not excluded) the collateral is protected and that's all they care about. Your mortgage payment probably includes a component for insurance... you drop the insurance and you are in default.

There are better ways to generate business.
 
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<Duff>
posted
Hi Scott,
Didn't we meet in Sacramento last November? I think so.

Good points, all.
Anyhoo...from the bottom.

This is (for me anyway) less about generating business, and more as John deftly noted at ISA board, about raising public awareness (and my own), to effect healthier urban forests with less blindly-assumed risk.

Thoughts on Reaction 4:
a) IMO, some closings merit a hold up. So do some trees.
b)I'm obviously not an attorney, but isn't that what disclosures and escrows are for...discovery of conditions and acceptance of risks by all parties, fully informed?
(Emphasis here on disclosure, rather than cure, leaving it to the buyer & seller to accept, pursue, or neither, but encouraging thoughtful consideration before signing thereto.)

c) Real Estate Transfer Disclosure Statement,Natural Hazard Disclosure Statements and the Eight page Residential Purchase Agreement and Joint Escrow Instructions are the documents California Realtors must use when they help to sell a property.

Personally, I have no problem with real estate contracts on dinner napkins between consenting adultsâ¦but full disclosure and accessible professional advice where needed are critical ingredients of good decision-making either way.

Until disclosure laws were changed in the seventies (?), sellers could (and did) slide egregious risks upon to unsuspecting or naive buyers, and so could (and did) real estate agents.

I have observed that many buyers, (and sellers, and real estate agents, and pest control inspectors, and presidents, and bankers and lawyers and convicted felons and their sisters) just don't even think TO ask about trees, let alone know WHAT or WHO to ask.

"Yer an arba-whatsiss?
chortle-chortle-yuk-yuk-ha-ha-ha"

People just don't look up, mostly...and they don't want to either, any more than they want to look down and avoid the sidewalk anomaly or look out for potholes.
We fall in love with houses, and with trees, and with ideologies (or we don't), and we get all glassy-eyed and overlook important things. Humans are extremely vulnerable in this state and the weakness is easily capitalized upon by even marginally adept sliders.

We all swear not to be sliders, right?

Not everybody does, and far too many don't. Ethics are in crisis, worldwide. Arnold, Angelyne, and Larry Flynt all want the governor's seat. I sure wouldnâ™t want it right now, but bully for them. The entire region is swaying quietly at the brink of an epic economic disaster. Somebody's gonna swing when the other shoe drops.

I live in a big sprawling city-county with a LOT of people, and most of 'em don't know jack about trees. Those who do, rarely visit this board. My county's urban forestry plan is nonexistent (not exaggerating).

Sliders have seized control of the panicky minds of many of our citys' leaders and administrators (OK, that may be exaggerating....but not much). Apathy is the dominant social theme, with occasional vibrant ephemeral blossoms of enthusiasm and drive. In this political climate itâ™s even easier to slide things by unnoticed.

Shining examples of my city's public interest prowess are a new big block retailer, proud and blithe, right on a 303d list impaired creek...and I should turn the other cheek and get all warm, hoping that someday awareness will rise...I know.

Trouble is, it looks as if we'll be boiling water collected in spoons from mud puddles where the water was, sooner than later. Toilet to tap...doesn't that sound great??!!

Meanwhile, we bulldoze entire blocks of Healthy Mature Public Trees and Magnificently Sound Historic Structures to allow zoning and setback variances for nearly treeless tight-zone re-development. I don't care how cute they make those little retro-crafstman sardine porches...There is no room for shade trees, public or private.

AND the Street Tree budgets are all on the rocks.

A shelved and dusty (weak)draft Street Tree Master Plan and General Plan...ditto a good Historic Preservation Plan....and a Municipal Code so hopelessly muddled by now and out of sync with the General Plan, that enforcement is impossible, let alone cost effective. So they wing it. No guidance there...and resistant to change also.

...Uh, OK that was Reaction P.

Also, fyi, I contract directly for my property insurance, thank you, because I can. Likely so can you. Rarely is an loan impound account beneficial to the loan payer...like big income tax refundsâ¦.free loans to the sharks.

Thoughts on Reaction 3
I think you are right about that.

Reaction 2
That surprises me.
No insurance companies monitor tree losses?
When was her research done, and how extensive?
I have not had the pleasure of connecting with Debbie Ellis. Is she real estate? arb? Can you hook us up to chat or ask her to ring in here?

Thoughts on Reaction 1
OK, setting aside both professional technical consensus and mandatory inspections for a moment, if I may.

(Experts and their variations...sheesh....if we have to wait for consensus, I'LL be gray too....and even less shaded)

Have we standardized inspection technique enough for even a casual homeowner to check a few simple boxes and fill in a few specific blanks on a slightly expanded disclosure form?
Like:

(Any yes answers with details attached)
-Are there trees and shrubs onsite, and if so, how many are there, and what kind? Y/N/DK (if no, please continue to soil,water, and air quality disclosures)
-Are any trees or landscaping dead or dying?Yes/No/Don'tKnow
-Are you aware of any tree defects or significant risks in your trees and landscape? Yes/No/DK
-Have any of your trees ever been damaged or topped? Yes/No/DK
-Have any limbs over x" been removed or fallen naturally from any of your trees during the last 5 years? Y/N/DK
(other simple questions?)
-Will a consulting arborist's landscape condition report (or appraisal or inventory)be required as a condition of sale? Y/N (This would, perhaps, be one of those spots requiring individual initials of both buyer and seller).

And finally...anybody going to San Antonio next month?
 
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<Scott>
posted
Hi Pat,

No I was not in Sacramento, must have been someone else.

I think Debbie's research into insurance data as 3-4 years ago. She's a Registered Consulting Arborist in Saratoga, CA www.decah.com

I think efforts are better spent educating consumers than in letting bureaucrats handle anything.

SC
 
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