New "Flipper" Disclosure: What Realtors Need to Know
As of July 1st, 2024, a new law is set to shake up the real estate market, particularly for sellers who engage in property flipping. Dubbed the "Flipper Disclosure," this legislation imposes significant requirements on sellers who are flipping properties, aiming to provide greater transparency to buyers. Realtors need to be well-versed in these changes to navigate transactions effectively. Let's delve into the specifics:
**Who Does it Affect?**
The law primarily targets sellers who are accepting an offer within 18 months of acquiring the property and have enlisted contractors to perform work on it. These sellers, often referred to as "flippers," must adhere to the disclosure requirements outlined in the legislation.
**What's Required?**
1. **Disclosure of Alterations**: Sellers must disclose all room additions, structural modifications, and any other alterations or repairs that have taken place during their ownership. This disclosure ensures that buyers are aware of any changes made to the property since its acquisition.
2. **Providing Permits**: Sellers are obligated to provide copies of any permits obtained for the work done on the property. If permits are unavailable, sellers must inform buyers of the third party who can provide the permits. This step aims to verify that the alterations were conducted in compliance with local building regulations.
3. **Contractor Information**: If the cost of labor and materials for the work exceeded $500, sellers must disclose the names and contact information of each contractor involved. This requirement allows buyers to seek further information about the quality and legitimacy of the work performed.
**Implications for Realtors**
As real estate professionals, it's crucial to understand the implications of the Flipper Disclosure for both sellers and buyers:
1. **Educating Sellers**: Realtors must inform sellers about their obligations under the new law and ensure they comply with the disclosure requirements. This may involve reviewing property records, permits, and contractor agreements to gather necessary information.
2. **Advising Buyers**: Realtors play a vital role in guiding buyers through the purchasing process, including navigating the Flipper Disclosure. Buyers should be aware of the disclosed alterations and have access to pertinent information, such as permits and contractor details, to make informed decisions.
3. **Mitigating Risks**: Non-compliance with the Flipper Disclosure could lead to legal repercussions for sellers and potentially impact the transaction. Realtors must proactively address any discrepancies or issues related to property disclosures to mitigate risks for all parties involved.
The introduction of the Flipper Disclosure represents a significant change in the real estate landscape, particularly for sellers engaged in property flipping. Realtors must stay informed about these new requirements to effectively navigate transactions and uphold transparency and integrity in the buying and selling process. By ensuring compliance and facilitating informed decision-making, real estate professionals can uphold trust and facilitate successful transactions in this evolving regulatory environment.
