Who Needs a C.L.U.E.?

As a real estate agent, do you recommend clients order a C.L.U.E. report when they order their NHD report? If so, you might want to seriously reconsider doing so as it could make you liable as the real estate agent as well as create other problems, including:

  1. Delay order processing: Instead of ordering the NHD report on one call, by ordering the NHD with C.L.U.E., agents have to secure the signature of the seller on an approved form before placing the order for a C.L.U.E. report.
  2. Volunteering C.L.U.E. information gives buyers another opportunity to cancel: Agents must disclose to their client that a C.L.U.E. report is not required by law. Volunteering information that is not required by law could lead to a cancellation of escrow by the buyer.
  3. C.L.U.E. reports can delay the close of escrow: The process of requesting corrections for errors/mistakes in a CLUE report can take time and delay the close of escrow.
  4. Agents assume liability when advising clients on disclosures. Why would you recommend a C.L.U.E. report but not an Environmental Report or an Air Quality Report? Agents that order C.L.U.E., but none of the other non-required reports, could have to answer for why they advised clients on using one or more of the many non-legally required reports – especially if information on those other reports could have alerted buyers on issues that affect the desirability and value of the subject property.

Agents that I spoke with were surprised to learn that C.L.U.E. is not required by law and the fact that ordering C.L.U.E. without the written authorization by the property owner could make them liable for a breach of federal law.

Under the Federal Fair Credit Reporting Act (FCRA), and the FACT Act, information from a C.L.U.E. report is not public information.  Things like a person’s credit report, bank account information, credit card numbers and driver’s license information are not public information.  Information provided by C.L.U.E. is also personal data and as such is considered personal credit information and protected by law.

So, what is a safe practice for agents on the topic of the C.L.U.E. report? We recommend that agents take this approach:

  1. Do not advise/volunteer  non-legally required reports like C.L.U.E.
  2. When a client requests a C.L.U.E. report, inform them that they can get the C.L.U.E. report online. It’s FREE if they are the property owner.
  3. Avoid becoming an expert in disclosures. Recommend your clients order only what is required by law.

If you still have doubts, we suggest that you check with a real estate disclosure expert attorney. Just when you thought it couldn’t be tougher on agents, along comes this new insight.

Please let us know – is this news to you? Have you encountered this issue previously? How have you or agents in your office handled the request for a C.L.U.E. report?

  • Randall Jenk

    I’ve never recommended that my clients use a C.L.U.E. report, but I’ve had a one or two ask about the in the past. I really didn’t know much about them until now though, and after hearing this, I’ll probably stay clear of them in the future. Thanks for sharing this info!

    • Patrick Martin

      I do and will ALWAYS order a CLUE Report. In fact, we have sellers sign a CLUE order form at the same time they sign all other listing docs. We expect sellers agents to provide our buyers a CLUE Report within the 5 day period described in our contracts which demands a 5 year insurance claims history. If there are 2 or more property insurance claims, in my 26 years of experience in Arizona, a buyer could end up paying more in property insurance as a result. Whether it’s federal law or not, anything that materially affects a buyer’s decision to buy needs to be fully disclosed. Failure to disclose could lead to serious costs to a Realtor.

      • JN

        I agree with Patrick.Anything that materially affects a buyer’s decision to buy Must be disclosed. No matter where you’re practicing RE in AZ or CA. It is “mandatory to disclose insurance claims in the 5 years before a property sale”This ,definitely, could cover Realtor.

      • RE_Insider

        I disagree. As I stated above in CA, C.L.U.E. is not required by law. You are taking on potential liability by recommending your seller obtain a C.L.U.E report. Leave the responsibility with the seller not with youself.

        • Darlene Beukelman

          You are correct, the CLUE is not required by law, but your article leaves out an important fact, the Seller is actually providing the CLUE because he is the one that has to sign a release for it. Under the Federal Fair Credit Act a seller has to sign a release for that info to be released which is considered private. An agent doesn’t want to sign the authorization for the seller or use an NHD company that will release a CLUE without obtaining the sellers signature, that’s dangerous. Just because the seller obtains the CLUE through the NHD report for convenience sake doesn’t make it any different then making him go online to get it. Actually, the TDS does ask about insurance claims and that is required by law.

          • RE_Insider

            As stated in the article the seller has to sign the release for obtaining the C.L.U.E report and an agent is breaking the law if they sign for the seller or don’t get the required signature. If your seller requests a C.L.U.E report and you want to help them order it with their NHD that’s fine. The point we are making is don’t put yourself in the position of recommending it as part of your way of doing business. Also, be aware that ordering the report can cause delays with escrow.

  • DeborahFriedman

    I find this very hard to believe. The disclosure provider I use, based in Los Angeles, is the industry’s leading NHD company. It introduced the CLUE report to our California industry a decade ago and was the exclusive distributor of the product for many years. My provider has long assured me that the CLUE is safe, reliable, fast, and necessary for satisfying the California-mandate to disclose insurance claims in the 5 years before a property sale. My provider’s NHD website makes very clear that, “The C.L.U.E. Risk Only Report is the only fully insured insurance loss history report available, offering 48 hour delivery via phone, fax, and the web.” RE-Insider should check the reliability of its sources, and balance the story with the practitioners in the real estate industry who have used the CLUE without issue for over 10 years.

    • RE_Insider

      This article is about facts that need to be considered during the real estate transaction. The facts are:
      1) C.L.U.E reports are not required by law
      2) RE Agents could be presenting themselves as experts by recommending a C.L.U.E. report

      If your seller really wants a C.L.U.E. report have them go online and order it for free so you are not liable for the recommendation.

  • Wendy Fimbres

    In Arizona it is on the Residential Resale Real Estate Purchase Contract under Disclosures section 4b line 137-141 Seller shall deliver to buyer within 5 days a written 5 year insurance claims history regarding premises either from Sellers insurance or an insurance support organization, but seller may obscure any reference to personal information. So we have to have one apparently. Your thoughts.

    • RE_Insider

      Do you take on any additional liability in the transaction process. If your seller wants a C.L.U.E. report have them go online and order it for free.

      • Wendy Fimbres

        It’s not the seller requesting it it is on our Purchase contract that it shall be provided.

  • RE_Insider

    A C.L.U.E report is NOT required by law and therefore the agent is possibly taking on liability by including what could be an inaccurate report. Also the report is free if provided by the seller. Why not leave it up to the seller?

    • Calchiefsfan

      The agent is NOT taking on additional liability by providing a CLUE report. The legal precedent has already been set in favor of the Broker that they are not considered to be experts in all matters regarding disclosures. These reports incuding the NHD, home inspection, termite etc are designed to protect ALL parties from potential future conflict.
      This “whole hide the facts so you won’t be liable” approach is tantamount to a used car salesman mentality. We as Brokers should strive for transparency in a transaction. It is our fiduciary responsibility to advise our sellers to disclose all material facts, if they don’t then they can be subject to a law suit.

      • RE_Insider

        And another one. Your thoughts? I already responded to him and he is continuing the thread?
        Tricia Hawkins
        Bob Gold & Associates
        1640 Pacific Coast Highway
        Redondo Beach, CA 90277
        (office) 310-320-2010
        (mobile) 310-971-5363

        Delivering Meaningful Connections Through Integrated Communications

        Please consider the environment before printing this email. Even small changes can have a big impact.

      • RE_Insider

        Why not include an environmental report in every transaction since it is a material fact and the most prevalent issue in California? What about air quality which is also available and of significant impact when comparing Pasadena to Culver City? What about the proximity to waste fields? They are a material fact and their location is available.

        Our point is that all of the above and C.L.U.E. are not required by law and an agent that arbitrarily uses C.L.U.E. but not environmental, air quality, dump sites and others, also not legally required reports, is selecting/advising and could be held to a higher standard as an expert.

        We do not believe it benefits an agent to volunteer non legally required disclosures. If the agent opens”Pandora box” with one non legally required report, where is the end to disclosing non legally required disclosures?

  • David_Shapiro_3

    To paraphrase Lincoln, better to remain unbiased and be thought a rival than to speak and remove all doubt. The CLUE product clearly has many supporters. Your thesis suggests a bias. Agents have but one other choice for an insurance claims history product (the A-Plus report). Do you suggest that we switch to the rival product? Or, should we avoid an entire class of valuable real estate disclosure tools, as if to say we should abandon home inspections because they, too, create the four problems you attribute to the CLUE? After years of enjoying your news features, disclosing your allegiance here would we be in the spirit of “integrity, honesty and professionalism.”

    • RE_Insider


      We are advocating for agents here and want to protect you from potential liability. I’m not sure if you saw the story we covered last October, but an agent was sued by a buyer because the Mello-Roos disclosure that was ordered with their NHD report from Fidelity Disclosure Source was inaccurate. See the story here:


      The agent was not supported by Fidelity and it cost his broker over $14,000 to defend himself and almost a year of litigation at the time we covered the story. NHDs are required by law, C.L.U.E isn’t. If your seller wants a C.L.U.E report help them order it, but avoid becoming an expert in disclosures.

  • RE_Insider

    One of our readers, Carol Farwell emailed us a response to this article and we’d like to share that with you:

    I think this is a very good topic. Representing the seller, I would prefer the buyer procure that report, if it’s important to them. Since it’s not mandatory, why do we want to put our sellers in that sort of jeopardy? Buyers need to take on their investigation of the property with a true diligence during the inspection period. If a seller is honestly disclosing all material facts and includes the SPQ, I don’t think it’s their duty to suddenly go into deep investigation of their property’s past history. They are selling what they know to be true, what they have experienced as a resident.

    Also, I feel we face yet another liability, as agents, when we discuss some of these reports with our buyers. We have to tread so carefully because they want to know if what they are reading is going to impact them down the line, or if it will become a bigger issue. If we don’t have that exact answer, and we don’t point them in the right direction (or if they ignore the suggestion to speak to a qualified person for that specific issue), we stand to have to re-visit the problem down the line. No one wants to do that. It seems that the paragraph in the RPA, which states that the property is being sold in its present, as is condition, is losing its place in today’s litigious real estate market.

  • RE_Insider

    Chris, I agree with you that C.L.U.E. reports will provide information about the claims history of the property and if the seller doesn’t honestly provide that information they are being deceitful. The point of our story is to educate RE agents about the signature requirement of the report and to warn them to not position themselves as a disclosure expert because of potential liability.

    Ordering C.L.U.E. can delay escrow and these reports can contain error as well.

    Inform your seller or buyer about reports they might want to order but don’t recommend non-legally required reports. Let it be their decision. This is the
    best way to protect yourself.

    Most people aren’t deceitful and most reports are accurate. When this isn’t the case you don’t want to be the fall guy. Please check out the story we covered last fall and talk to Bob Stickney from C21 to see what happens when a buyer sues an agent because of errors in reports. We’re just trying to keep you out of trouble here.


  • Guest

    The Clue does not delay an escrow. Most providers get it back to the agent in a hour or so after the Clue authorization form is received. Most educated agents get it signed in their listing packages & have them ready to go when the property goes to escrow.
    But yes, the NHD providers that let’s their agents sign as the seller, or that state the agent must retain the signed Clue autho form (VS getting it back to the NHD provider) are putting agents at risk.
    Another item to note is not 100% of insurance companies are reported in the Clue report. It is not always 100% accurate.

    And yes Deborah, a Clue report has nothing to do with the state mandated Disclosure law. Google CA civil code 1103. The NHD provider that told you that is incorrect.

  • ssmith

    Thank you reinsider! You brought up a serious liability topic to the readers. I was lazy and did not research the need for clue until I read your posting. I called our company attorney and sure enough you were right. From now on, our company will not order clue reports for our clients. Our attorney is drafting a memo that we will advise our clients that if they want a clue report they can order it for free themselves online.

  • Gina P

    You did not get comments from educated agents when referring to all material facts. Those were the ignorant people that buy anything they are told. There could be dozens of material facts affecting the property but is it the agent’s responsibility to find them? Definitely NO! Outside the mandatory legally required disclosures, agents must disclose KNOWN TO THEM material facts affecting the property. The seller also must disclose any material facts KNOWN TO THEM affecting the property. CLUE is not required by law.

  • S. Richardson

    I am very pleased to see that Re-insider has taken on the corrupt industry of the NHD. Of course the CLUE is not required. The NHD industry is guilty of mixing legally required with non-legally required items, like CLUE.

  • DeborahFriedman

    CLUE aside, I have to disagree about
    disclosures that are not required by law. Most NHD companies include them. The
    mandatory NHD report that I use (provided by the company in Los Angeles) includes
    many many disclosures intended to protect me and my seller, over over half the report, some twenty disclosures, are not required by state or federal law, from endangered species to fault shaking zones. Do you really think all those not-required
    disclosures are creating liability for me rather than reducing it? Puleeze!

  • leef

    I never recommend Clue, it’s always there with the home insurance.

  • JD

    I completely agree. When I put the nhd reports from 2 different companies side by side, the differences are huge. I believe that if re-insider were to investigate the nhd industry, the rats would be uncovered.

  • randerson1

    CLUE is free and not the requirement of agents. I know that agents are not known for reading the small print or spending time researching, but their ignorance will cost them. They choose CLUE and not enviro reports? That is crazy. Somehow they will learn with the knock on the door from the courts.

  • Anonymous

    I am a lawyer drafting a lawsuit against a seller and an agent on a bad NHD report. These people have used the lowest priced NHD which lacks the county disclosures but included a CLUE. I am going to get the agent to answer on her advice on CLUE, which is definitively not required, and also get answers as to why they did not report on the county disclosures which ARE required…

  • patrick

    What separates the nhd suppliers is honesty. The ones that include clue with the nhd are bringing more money to their pocket. The ones that have them available but are not forcing it in the nhd are the respectful ones.

  • BW

    NHD is the high risk necessity. This is the only document in the transaction that is not regulated by government and the one that can bring high liability to us agents and sellers. There are new NHD companies coming all the time and many going out of business all the time. Why isn’t REinsider investigating the NHD industry?

  • paul dave

    Great Article. Thanks for the info. Does anyone know where I can find a blank form Residential Lease Estate Purchase Contract?