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2012-01-05 14:16:23
Utah Realtors - Real Estate - Non-Occ Addendum

Utah Real Estate Agents will no longer be using the Non-Occupant of Property addendum for most Real Estate transactions. The exceptions will be REO, Bank Owned and Foreclosure Property where the seller has absolutely no knowledge of property condition.

Where is the Non-Occupant of Property Addendum? 

The Utah Association of Realtors® forms committee has recently removed the Non-Occupant of Property Addendum from the UAR forms library. This form was originally designed many years ago to be used in a very narrow set of circumstances. However, over the past few years, it has become misunderstood and frequently misapplied. It was intended to be used only when a seller had not lived in the property and because of that, did not have sufficient personal knowledge concerning the condition of the property necessary to accurately fill out the Seller Property Condition Disclosure (“SPCD”) form. 

Over the last several months, the UAR forms committee has become concerned about the potential liability for its members and their clients resulting from the frequent misapplication of this addendum in today’s real estate market. Too often, sellers were using this addendum incorrectly. Sellers would often mistakenly want to hide behind this form and not provide any disclosures if the seller had merely not lived in the property at all, or hadn’t lived in the property for a short period of time. For example, an investor/seller who purchases a property, fixes it up, and then lists it for sale. In this scenario, the seller would often use the Non-Occupant addendum. The seller or the listing agent would believe that because the investor/seller had not lived in the property, the Non-Occupant Addendum was appropriate. Not so, because the seller, by fixing up the property, surely had knowledge of its condition. 

Whether the seller had not lived in the property is not the question to be asked. The important question is whether the seller has knowledge concerning the condition of the property. If the seller has any knowledge about the condition of the property, then the SPCD form should be provided to the buyer (see sections 7(a) & 10.3(a) of the standard REPC). In other words, just because a seller had not lived in the property as in the investor/seller example above, does not mean the seller is off the hook from providing a SPCD form to the buyer. The seller should simply fill out the SPCD to the best of his/her knowledge. 

In summary, a seller will need to fill out the SPCD form in most real estate transactions, regardless of whether the seller has lived in the property or not. The only circumstance a seller will not be obligated to provide a SPCD form is if the seller has no actual knowledge concerning the property. For example, an REO property, or a situation where the seller inherited a property but had never lived in it and was not aware of its condition. In those circumstances, the listing agent may simply attach a generic addendum to the REPC that states the seller will not provide a SPCD form as required in section 7(a) of the REPC because of insufficient personal knowledge concerning the condition of the property. Taking this approach is appropriate in those few instances where the seller does not have personal knowledge concerning the condition of the property. In all other cases, the listing agent should instruct the seller to fill out the SPCD form for the buyer.

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