In response to a recent appellate court decision, SFAR is releasing a new advisory to use in transactions involving "mixed use" properties. A copy of this new advisory is now available on the SFAR member website until it becomes available on the zipLogic and Instanet forms platforms.
The new advisory concerns when, and how, the statutory Real Estate Transfer Disclosure Statement ("TDS") should be used by sellers of "mixed use" properties. The recent decision confirmed that the statutes requiring sellers to provide a TDS apply whenever a property has "not less than one nor more than four dwelling units" and is not otherwise exempt, regardless of whether the property is otherwise predominantly used for commercial purposes. While that was no surprise to many practitioners, the decision unfortunately went on to raise and leave undecided the question of whether a seller who is obligated to provide a TDS for such a property must complete the form for both the residential and commercial portions of the property. By leaving that question open, the appellate court created uncertainty as to a legal point that only qualified attorneys can address for sellers.
The new advisory addresses this uncertainty. After providing a definition of "mixed use" properties and summarizing the TDS rules, it gives suggestions to sellers as to how to proceed as to the commercial portion of the property. Further, it reminds both buyers and sellers that under the applicable statute the inspection obligation of real estate brokers and agents is limited to the residential portion of the property, and obtains their acknowledgement of that limitation.
By using this new advisory in connection with the purchase or sale of "mixed use" properties with one-four dwelling units, membership will be able to minimize misunderstandings by sellers and buyers as to how a TDS should be completed for such properties, and whether the agent's portion (or an attached agent's visual inspection disclosure or statement) reflects an inspection of the commercial portion of the property.
How to Access the New Advisory
1. Go to my.sfrealtors.com
2. Click on the login button in the top right-hand corner.
3. Enter your 6-digit member ID and password.
4. In the dropdown menu under Documents, click on the SFAR Library link, click into the library and find the Mixed Use Advisory form.