Overview of Federal Disclosure Requirements:

There are several Federal requirements that require a disclosure by real estate professionals. The following Federal guidelines specifically affect appraisers:

  • Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)

  • Bulletins of the Office of Thrift Supervision (OTS)

  • Various letters and policies of the US Housing and Urban Development (HUD)

  • Selling Guides of Fannie Mae

  • Advisory opinions of the Uniform Standards of Professional Appraisal Practice (USPAP)

  • Bulletins of the Office of Comptroller (OCC)

  • Guide notes of the Appraisal Institute

  • Guidelines of the Federal Deposit Insurance Corporation (FDIC)

  • Policies of the Veterans Administration and the bulletins of the Federal Home Loan Mortgage Corporation (FHLMC)

Following are some excerpts from the Federal guidelines:

The appraiser must be aware of and report any contamination disclosed by the client or found through the normal observation and research conducted during an appraisal assignment.  (USPAP, Advisory Opinion AO-9)

The appraiser has a responsibility to note in the appraisal report any adverse conditions that were observed during the inspection of the subject property or report any information that he or she became aware of through the normal research involved in performing the appraisal.  (Fannie Mae Selling Guide VII, 303 and 405.02)

Environmentally related hazards can be a source of high risk and potential liability…potential environmental problems exist in a myriad of forms such as asbestos insulation, underground storage tanks, surface improvements, septic tanks systems, and/or oil & gas wells.  (OTS 1989 Bulletin TB-16)

For real estate brokers and agents, there are 29 States that have specific disclosure laws, and it is highly recommended in 18 others.  Here are some of the key State court decisions regarding disclosure:

Fausett & Co v. Bullard, 229 S.W.2d 490 (Ark. 1950)

Clark v. Olson, 726 S.W.2d 718 (Mo.banc 1987)

Lynn v. Taylor, 642 P.2d 131 (Kan.App. 1982)

McRae v. Bolstad, 646 P.2d 771 (Wash. 1982)

Fauerke v. Rozga, 332 N.W.2d 804 (Wis. 1983)

Reed v. King, 145 Cal.App.3d 261, 193 (Cal.Rptr.130 1983)

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