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Provo rescinds zoning disclosure law

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PROVO — The Provo City Council unanimously rescinded a 2-week-old zoning disclosure ordinance on Tuesday, clearing the way for changes to the standard Utah real estate contract.

Two forms in the state contract will be altered, possibly within six weeks, to reflect the disclosures called for in the repealed city ordinance, said Chris Kyler, CEO of the Utah Association of Realtors.

Provo's ordinance required sellers to disclose more to homebuyers about the legal uses of a property, including the rental licensing history, a major issue in a city that is home to about 35,000 students from Brigham Young University, Utah Valley State College and several specialized colleges.

Many Provo homeowners rent homes or basement apartments to students, but many of those rentals are illegal uses of the property. Frustrated in other attempts, the City Council passed the ordinance Aug. 8 to ensure buyers knew whether the property they purchased could be used as a rental.

"We're going to create a paper trail so buyers can no longer say, 'I didn't know,"' Kyler said. "Yes, you did. Really what happens is some buy it and intend to use it for something that is illegal. They figure they'll rent it until they get caught. This puts in the forefront of their mind: This is the legal use, and there's a paper trail."

A summit between the City Council and the Utah Association of Realtors, hours before Tuesday's City Council vote to repeal, established concepts and much of the language that will be added to the seller's property-condition disclosure form and the buyer's due-diligence checklist, Kyler said.

Model language for the changes was e-mailed to members of a drafting committee on Wednesday. The committee is scheduled to meet Aug. 31 and will create a final proposal. Kyler said approval could come in September.

"Hopefully, probably, by Oct. 1 you should see saturation and market use of the forms," he said.

The agreement maintains the uniform nature of the contract. State Senate President John Valentine, R-Orem, and Realtors expressed concern that Provo's ordinance could lead to ordinances in other cities that would clutter the state's real estate market with dozens of exceptions to the standard contract.

Realtors also were nervous that Provo's ordinance required sellers to provide zoning disclosure prior to the traditional point in a sale. The City Council agreed to accept the timing of disclosure in the standard contract.

The rental market makes up 61 percent of Provo real estate, according to the 2000 Census. Provo leaders say the percentage is much higher because the census didn't count, for one, the rented basement apartments in owner-occupied homes.

"People come into Provo to buy rentals because it's a university town," City Council chairman George Stewart said. "So two pieces of information are critical. No. 1, does the property have a rental license? No. 2, what is the legal use of the property?"

The seller's disclosure form likely will change to include revelations about whether the owner ever applied for a rental license and, if so, if the application was rejected. The zoning and legal uses for the property would become more prominent in the buyer's due-diligence checklist.

"I couldn't be happier with this resolution," Stewart said. "We've been the catalyst to change the uniform state contract for real estate purchases. This will not only affect properties in Provo but statewide."

The agreement won't cover every transaction in the state. The standard contract is produced by the Utah Association of Realtors and used in deals where a Realtor is employed.

"The large majority of transactions do use professionals," Kyler said. "The question now is how do we attack the bulk of the problem immediately, and then we can address" the transactions that don't use the disclosure forms.

E-mail: twalch@desnews.com