The Roles And Responsibilities Of The Seller And The Buyer

Traditionally, the Seller has the responsibility to disclose any known defects that are not discoverable by a Buyer by an inspection. An owner (Seller) is presumed to know the boundaries of the property and a misstatement of the quantity of land or its geography may constitute fraud. Under California law, the Seller that is relying on erroneous information from a previous owner is not excusable. However, misrepresentation is not fraud if the Seller, in good faith, relied on a misplaced surveyor’s mark. A standard title policy does not insure the boundaries, unless a survey is being done; then, the coverage may be extended to cover the boundaries.

Purchasers are presumed to have constructive notice of matters that are discoverable by inspection of the property. Thus, it is the Purchaser’s responsibility to “walk the property” to determine if there is any discoverable defect. As stated above, the California Title Policy Association (CLTA) does not provide protection of the physical location of the property or unrecorded encumbrances that an inspection would reveal. To guard against these hazards, the purchasers should have an expert inspect the property. If it concerns uncertain boundaries and unrecorded easements, such as a rural property, a surveyor may be needed. In addition, an American Land Title Association (ALTA) extended coverage policy may be desirable where boundaries and unrecorded easements is in question. An ALTA policy usually costs more than a standard, CLTA, policy.