C.L.U.E. REPORT NOT REQUIRED BY C.A.R. PURCHASE CONTRACT
C.A.R. has received several inquiries from REALTORS® regarding the disclosure of insurance claims in real estate transactions specified in Paragraph 7B of the C.A.R. Residential Purchase Agreement.

C.A.R.'s purchase agreements include a provision requiring a seller to disclose known material facts and defects affecting the property being sold, including known insurance claims within the past five years. The contract does not require purchase of a third-party report, such as C.L.U.E. Sellers may make these disclosures by using the C.A.R. Standard Form Supplemental Statutory and Contractual Disclosures (Form SSD), which allows a seller to disclose his or her awareness of insurance claims via a simple Yes/No checkbox format.

A seller must disclose only known insurance claims; C.A.R. purchase agreements do not require sellers to discover unknown claims, or to purchase reports or other third-party information to make this disclosure. Although sellers may choose to provide and pay for a third-party report to provide this optional third-party information to buyers, neither the law nor C.A.R.'s purchase agreement require that they do so.

Given the increased difficulty of obtaining affordable homeowners' insurance in recent years, buyers should obtain quotes as early as possible in the home buying process. In the process of obtaining insurance, the insurance agent or underwriter will most likely be checking the insurance database as a matter of course. Buyers should seek insurance quotes during the inspection period so that there will be clear understanding of the cost of the insurance early in the transaction, and so that buyers will have an opportunity to evaluate this fact during the inspection period.

For additional information, C.A.R. members may contact C.A.R.'s Member Legal Hotline at 213.739.8282, or 213.739.8350 for office managers, broker/owners, and Designated REALTORS®. Hotline access is also available through C.A.R. Online at http://www.car.org/.