California law requires residential home sellers to make a written disclosure to buyers.  There is a significant document, called a transfer disclosure statement (TDS), which the seller can fill out online, but the state requires many other documents regarding different disclosures.

It is essential for buyers to examine these once the seller fills them out to make a fully informed decision. It can affect your offer price, or even if you want to pull out of the deal.

The disclosure

Sellers must fill out the TDS, a simple but very important form. The seller needs to check the boxes for which appliances are included, and if there are any known defects, which he/she must describe. Then, the seller must state whether he/she is aware of any issues with a variety of categories, such as the interior walls, ceilings, floors, insulation, roof, windows, and foundation. Finally, the seller must let the buyer know if the property has abatements/citations against it and outstanding lawsuits that would affect the property.

California also requires sellers to fill out a Natural Hazard Disclosure Statement, which relates to increasingly essential items such as whether the property is located in a flood hazard area, where there is substantial forest fire risk, and if it is in an earthquake fault zone.

Under California law, there is a Megan’s Law disclosure where the seller must let you where you can find out more information regarding registered sex offenders.

There are some other different disclosures required, such as those relating to radon gas, but these are the major ones.

When is it filed?

California does not mandate a required deadline for the seller to fill out the disclosures. Ideally, a buyer would like to have it before making an offer. Some sellers have it around the time they list the property, but others are laxer.

Are these accurate?

Sellers are only required to disclose material issues, so you should not expect minor problems to appear on the form. From a legal perspective, “material” means that it is vital to the buyer’s decision.

However, it is in the seller’s interest to make the statements as accurate as possible. Many agents advise disclosing more rather than less from a business and practical standpoint. Otherwise, the buyer has the right to cancel the contract at any time, without penalty. After all, the issue is likely to come to light during the home inspection, which we highly recommend. This means the seller not only has lost a sale but wasted his/her own valuable time.

Even if the issue is not uncovered by inspection, the seller is not in the clear. After closing, the buyer can sue the seller for failing to disclose a material issue. The onus is on the buyer to prove that the seller knowingly hid the problem, rather than merely not knowing about it. The buyer can investigate, such as speaking to neighbors. The seller may have a high price to pay, including compensatory and punitive damages.

Few exceptions

The disclosure requirements apply to virtually all California home sellers, regardless of the property type. This includes single-family homes and condos.

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