Selling a House in California? Get to Know the Rigorous Transfer Disclosure Statement

Californians like their sushi rolled, their ocean waves big, and their real estate disclosures rigorous and handwritten.

That’s why during the process of selling your house in the Golden State you’ll come across the Transfer Disclosure Statement (TDS), California’s official form for disclosing any known issues that could negatively impact a home’s value or pose an unreasonable risk to the buyers’ safety or health.

Most states, in some shape or form, require sellers and their agents to disclose any of these “material defects” about a home upfront in writing (we even put together a list of all 50 states’ mandated disclosure paperwork for super easy access.)

But per Civil Code Section 1102, California has some unique and particularly thorough rules for home sellers, all laid out in the Transfer Disclosure, that we’ll go through point by point to make completion as easy as possible.

Filling out the California Transfer Disclosure Statement: All…by…yourself, sellers!

Generally, sellers complete real estate disclosure paperwork after the buyers sign the purchase offer agreement or may even have it filled out prior to listing their home. There’s no official deadline for delivering the form but it’s expected to be provided to the buyers in a “timely fashion.”

Then, the buyers of your house do have a deadline to either move forward or terminate the contract based on any discoveries in the disclosure: they get three days to cancel the deal if you delivered the document in person, and five days if it came by mail.

By law, you must fill out the disclosure form by yourself, in your own handwriting. While your agent is allowed to assist you in understanding what is being asked of you, he or she cannot legally complete the form on your behalf.

“I don’t fill it out for them,” Bakersfield, California-based agent Bart Tipton, founder and team leader for Prestige Properties, said.

“Nor can I give them advice. If they have questions, it’s recommended that they talk to a real estate attorney.”

Indeed, your agent should be familiar with your state’s disclosure requirements and statutes but may be limited in what they can legally advise. When in doubt, always consult a real estate attorney for their advice on whether you should disclose something about your property’s history to cover all your bases and navigate any gray areas with care.

Filling out the forms accurately is essential, Tipton said, since the threat of failing to properly disclose issues can pose a legal problem. “What’s pertinent information to a seller may not be to a buyer and vice versa; that becomes an issue of ‘under-disclosure’ and that’s going to lead to issues down the road,” he said.

Gerard Launay of Berkeley and Sebastopol, California, based Law Office of Gerard D. Launay called the TDS “a pretty complete disclosure,” noting that the onus is on the seller to provide any information he or she has with regard to their property.

“Pretty much the rule is that if you have any notice or knowledge that you have a problem with your house, you have to disclose it,” he said. “Homeowners have the experience of being in their home and they know when things don’t work. The Realtor wouldn’t know that. There are certain things the buyer should know.”

What does California’s Transfer Disclosure Statement require sellers to disclose?

Both Tipton and Launay agree that one of the more significant disclosures is whether or not anyone has died in the home. “That’s probably the one that people get the creepiest about,” Tipton said.

California’s law is unique in that any deaths—including natural ones—in the past three years must be disclosed. That’s according to California Civil Code Section 1710.2, which also states that a seller need not disclose a death that occurred on the property if it occurred outside the three-year time frame.

However, there is one exception: death disclosure due to AIDS is considered discriminatory and cannot be done even if it occurred within the three-year time frame. This is true in every state per the Department of Housing and Urban Development’s fair housing laws.

Other items that the TDS requires California sellers to disclose include:

• Any chemicals on the property—for example, if marijuana or methamphetamine was grown there: “That’s a pretty important one,” Tipton said.
• Major neighborhood disturbances such as rush-hour traffic or adjacency to an airport.
• Any encroachments, easements, or other issues affecting a seller’s interest in the property.
• Flooding, drainage, or grading problems.
• Any common area—such as a pool or walkway—co-owned in undivided interest with others.

Tipton warns sellers to prepare themselves: “There’s a lot of questions,” he said. “If they answer yes, they want (you) to give a short explanation as to why.”

For example:

• If you as the seller know of any possible zoning changes that are coming up.
• If there are any legal claims against the property.
• If there have been any insurance claims against the property in the last five years.

No extra documentation is required up front with these disclosures. However, if after a buyer looks over the disclosure and wants more information, he or she can request it at that time.

“The buyers can dive as deep as they want and ask as many questions (as they need),” Tipton said. “I’m sure in the past I’ve had a sale fall through because of transfer disclosure issues. It’s pretty easy to get out if someone gets cold feet.”

Breaking down the contents of the California Transfer Disclosure Statement

Now that you’re ready to fill out the TDS, let’s break it down into manageable chunks. It consists of:

Section A of the Transfer Disclosure Statement: Property Characteristics

Here a seller must indicate whether he or she is occupying the property, along with the specific appliances being sold along with the home.

This list is fairly exhaustive and includes kitchen range, dishwasher, central heating/air conditioning, sprinklers, and hot tub.

It also comes with the proviso that the form is not a warranty, but it is a reliable source of information for the buyer to trust that the seller has disclosed any items not in operating condition. It goes on to clarify that the representations are that of the seller, not of the agent(s), if any, and is not part of the buyer-seller contract.

Section B of the Transfer Disclosure Statement: Malfunctions and Defects

Here the seller must answer whether he or she is aware of any significant malfunctions or defects in various structural components including:

• Sidewalks
• Walls/fences
• Electrical systems
• Insulation
• Windows
• Interior walls
• Roofs
• Driveways
• Ceilings
• Floors
• Doors
• Exterior walls
• Foundation
• Slab(s)
• Plumbing/sewers/septics

This is intended to cut down on a seller attempting to cover up the home’s defects.

“Many homeowners really either don’t know, or they go into denial and they figure, I can function in my house (as it is) but what the buyers want to know is … there a big scratch on the window, is there something you did to the deck to make it look bigger than it is?” Launay said. “(These are) cosmetic repairs as opposed to substantive repairs so that the house looks better than it really is. It’s to make the house look good for a sale and is less focused on the inherent problems.”

Section C of the Transfer Disclosure Statement: Special Questions

This is a lengthy list of 16 yes-or-no questions designed as somewhat of a catch-all to cover what may not already have been addressed in Sections A and B. The seller is requested to indicate whether he or she is aware of elements such as:

• Room additions or modifications to the property
• Major damage to the property from fire, earthquakes, floods or landslides
• A homeowner’s association that has any authority over the property
• Any notices of abatement or citations against the property
• Fill, compacted or otherwise, on the property or any portion thereof

What other notable disclosures are required in the transfer of California real estate?

The California Transfer Disclosure Form has a section detailing “coordination with other disclosure forms.”

Specifically, it states: “This Real Estate Transfer Disclosure Statement is made pursuant to Section 1102 of the Civil Code. Other statutes require disclosures, depending upon the details of the particular real estate transaction.”

Other legally required disclosures include the Natural Hazard Disclosure Report/Statement that, according to the TDS, “may include airport annoyances, earthquake, fire, flood, or special assessment information, have or will be made in connection with this real estate transfer, and are intended to satisfy the disclosure obligations on this form, where the subject matter is the same.”

Other disclosure forms that are frequently listed here include:

• Agent’s Inspection Disclosure Form, which is based on “a reasonably competent and diligent visual inspection of the accessible areas of the property.”
• Local Option Real Estate Transfer Disclosure Statement, which provides specific information about the neighborhood or community in which the property is located.
• Notice Regarding the Advisability of Title Insurance, in which both buyer and seller acknowledge a transaction in which no title insurance is to be issued.

Be sure to check out HomeLight’s article on required disclosures when selling one’s home in any state. Addressed here are:

• The seller’s disclosure form
• Why document disclosures matter
• What must be disclosed when selling a home

Anything else sellers should know about the TDS?

While California’s TDS is particularly rigorous, “It’s a very litigious state,” says Tipton. “If someone could be sued for something, I’m sure they have a question about it on the disclosure statement.”

While your agent may not be legally allowed to fill out these forms for you, they can advise you on what must be submitted in line with your individual sale. This is one of many reasons that selling your home with agent representation is preferable.