If you’re a resident of the Golden State, you are required by law to disclose specific details about your property to prospective buyers. You can share this information via the State of California, Department of Real Estate, Disclosures in Real Property Transactions form.
You can use this form, also known as the real estate transfer disclosure statement (TDS), to “describe the condition of [your] property and, in the case of a sale, [give it] to a prospective buyer as soon as practicable and before transfer of title.”
Real Estate Transfer Disclosure Statement (TDS)
The TDS is a detailed checklist that outlines potential problems with your property. In addition to including your information, the TDS requires you to disclose information about the following:
- What items are included with the property; e.g., dishwasher, sump pump, garage, etc.
- Whether you are aware of any significant defects/malfunctions in specific areas of the property; e.g., ceilings, doors, walls, roof, etc.
- Whether you are aware of specific problems with the property; e.g., flooding, drainage, or grading problems; neighborhood noise or other nuisances; notices of abatements or other deed restrictions or obligations, etc.
*For full details regarding what must be disclosed, visit CAR.org.
Additionally, your real estate agent must visually inspect the property and determine whether other items should be disclosed.
According to common law, “where the seller knows of facts materially affecting the value or desirability of the property [known or accessible only to him or her] and also knows that such facts are not known to, or within the reach of the diligent attention and observation of the buyer, the seller is under a duty to disclose them to the buyer” (Lingsch vs. Savage).
Breaching Duty Related to Disclosure
Neglecting to disclose specific details about your property can be consequential and give rise “to a cause of action for both rescission and damages.”
Breaching your duty applies not only to withholding information but also to misleading the buyer with “half-truths” or suppressing or concealing facts within your knowledge that materially affect the property or the buyer.
Do you need to disclose information when selling a property as-is?
Even if you’re selling the property “as-is,” you must disclose the information outlined in the TDS.
Numerous California court cases have determined that “neither an ‘as is’ sale nor the buyer’s independent inspection exonerates a seller or the seller’s agent from fraudulent misrepresentations concerning known defects not otherwise visible or observable to the buyer.”
The law is clear on this: “[W]here the seller actively misrepresents the then condition of the property or fails to disclose the true facts of its condition not within the buyer’s reach and affecting the value or desirability of the property, an ‘as is’ provision is ineffective to relieve the seller of liability arising from the concealed condition.”
In other words, honesty is the best policy when it comes to selling your home.
Delivery of the Disclosure After Execution of an Offer or Purchase Agreement
Generally, you must deliver the disclosure to the buyer prior to executing the purchase agreement. If you deliver it late, “the buyer has three days after delivery of the disclosure in person or five days after delivery by mail to terminate the offer or the agreement by delivering a written notice of termination to [you] or [your] agent.”
Who is exempt?
There are specific exemptions regarding seller disclosures. According to the Department of Real Estate (DRE), the following transfers are exempt from disclosure requirements:
- the sale of new homes as part of a subdivision project where a public report must be delivered to the purchaser or a public report is not required; however, when such new homes are sold through a real estate broker, the broker owes the buyer a duty to disclose any material facts that affect the value, desirability, and intended use of the property;
- foreclosure sales;
- court-ordered transfers;
- transfers by a fiduciary in the administration of a decedent’s estate, a guardianship, conservatorship, or trust – except where the trustee is a former owner of the property;
- transfers to a spouse or to a person or persons in the lineal line of consanguinity;
- transfers resulting from a judgment of dissolution of marriage or of legal separation, or from a property settlement agreement incidental to such a judgment;
- transfers from one co-owner to another;
- transfers by the state controller for unclaimed property;
- transfers resulting from failure to pay taxes; and
- transfers to or from any governmental entity.
The TDS is required upon the sale of any residential real estate. However, you may be required to provide additional disclosures upon the sale of the property.
Local Option Real Estate Transfer Disclosure Statement. A city or county may require you to provide specific information about the neighborhood or community.
Natural Hazards Disclosure. You or your agent must make appropriate disclosures if the property is in one or more of the following zones or areas: Zone A or Zone V (a specific flood hazard area, an area of potential flooding, a designated very high fire hazard severity zone, a designated wildland area [“state responsibility area”], an earthquake fault zone, or a seismic hazard zone. Some exemptions exist.
Mello-Roos Bonds and Taxes. If you’re selling a property that consists of 1 to 4 dwelling units and is subject to Mello-Roos bonds and taxes, you must make a good faith effort to obtain from the district a disclosure notice concerning the special taxes and give notice to a prospective buyer.
Property Taxes. You or your agent must deliver to the prospective purchaser a disclosure notice that outlines state notices pertaining to property taxes. Details are provided by the DRE.
Ordinance Locations. If you’re selling a residential property located within one mile of certain areas that were used for military training and may contain live ammunition, you must give the buyer written notice as soon as possible before the transfer of title. This obligation depends on you having actual knowledge of the hazard.
Window Security Bars. You must disclose the existence of window security bars and any safety release mechanisms on the bars. You should report this on the TDS.
Industrial Uses. If you have actual knowledge that the property is adjacent to or zoned to allow industrial use, you must disclose this information on the TDS.
Methamphetamine Contamination. If the property has been flagged by local health officers because it contains potential contamination of methamphetamine, you must provide the notice from the local health officer to the prospective buyer. The prospective buyer should acknowledge, in writing, the receipt of a copy of the order.
Earthquake Guides. If specific structural deficiencies exist, as outlined by the California Seismic Safety Commission, you must provide the buyer with a copy of the Homeowner’s Guide to Earthquake Safety. Additionally, you or your agent must disclose if the property is in an earthquake fault zone.
Smoke Detector Statement of Compliance. You must provide the buyer with a written statement representing that the property complies with California law regarding smoke detectors.
Disclosure Regarding Lead-Based Paint Hazards. If you are selling a property built before 1978, you must disclose to your agent or prospective buyers/lessees/renters the known presence of or any information and any reports about lead-based paint or lead-based paint hazards .
California Environmental Hazards Pamphlet. You or your agent must disclose any environmental hazards you are aware of. In addition, you must provide the buyer a pamphlet titled Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants.
Delivery of Structural Pest Control Inspection and Certification Reports. This report is not required by law; it must be provided if identified in the purchase agreement.
Energy Conservation Retrofit and Thermal Insulation Disclosures. You or your agent must disclose to a prospective buyer the requirements of the ordinances that impose additional energy conservation measures on new or existing homes, as well as who is responsible for compliance.
Certification Regarding Water Heater’s Security Against Earthquake. If you are selling a property that contains a water heater, you must certify in writing to a prospective buyer that the water heater has been braced, anchored, or strapped to resist falling or horizontal movement due to earthquake motion.
Data Base – Locations of Registered Sex Offenders. You or your agent must deliver to the prospective purchaser a disclosure notice that outlines state notices pertaining to locations of registered sex offenders. Details are provided by the DRE.
Working with a Professional
Due to the number of disclosures required by California law in the sale of real estate property, we recommend you work with a real estate agent to protect yourself from negligence. A real estate broker can share in the liability and offer support throughout the selling process.